Wednesday, July 20, 2005

HR is just a support function !!!!!

I don't have the statistics but am sure there are not many CEO's in this world who have a basic background in HR, not counting organisations who are in the business of HR or HR consulting.

The job of the CEO is (among other things)
- to provide the vision for the organisation
- to define the strategic roadmap
- to mobilise resources
- to develop capabilities in the organisation
- to nurture talent in the organisation
- to be the spokesman for the organisation both externally and internally
- to be the driver of performance

As far as my understanding goes,

- HR is the department which helps in creating the vision of the organisation and communicating it to the organisation
- They are part of the team which defines the strategic roadmap as controller of the most important resource, Human resource
- They mobilise Talent the most critical resource which works at mobilising all the other resources hence have an understanding of all other resources required by the organisation
- capability and talent management are the most important inputs of HR department
- They are the spokesmen for the company as an employer both externally and internally
- They are the controller of the process of performance management

If my assumptions on the CEO job description are right then ideally the HR folks should have the closest capability fit to the CEO position. I am sure I am taking a very simplistic view of things and have left out a lot of variables.

Lets look at how HR provides a well rounded General Management experience.

HR - The marketing / selling experience

HR departments job is to create an employer brand for the organisation so that prospective employees get attracted to the product (the employment experience). Since they are selling intangible service experience and hence I would assume they are in the more difficult terrain of branding compared to selling products.

They have to segment the prospective employee market to attract the right talent thru the right channels of recruitment at the cheapest cost at the price that the organisation is willing to pay.

They have to sell the employment experience to prospective employees to attract them and the existing employees to retain them.

Hence Kotler is as much use to the HR guys as is to Marketing folks.

HR - The finance experience

People cost is one of the significant cost items in most P&Ls. In knowledge based industries it is THE most significant head. Hence a need to understand the return on investment on this head is one of the most important aspect of HR. HR designs the performance pay programs which are based on the financial performance of the organisation in most cases. Hence there is no escape from understanding the nuances of EVA and ROCE and P/E and so on. Also as the key negotiator of the wage settlements which have huge long term financial implications for many organisations the HR department has to be familiar with all the financial details. One also can't escape understanding of the taxation matters when designing compensation packages.

HR - The operations experience

Being part of the union negotiations and also the authority responsible for disciplinary actions on the shopfloor the HR department has to have a good understanding of the workings of the plant. HR has to follow inventory management principles to keep the optimum pipeline of talent so that the operations are not stopped. HR creates policies manuals which are similar to the SOPs in a plant to a great extent.

Other than this, HR's role as a builder of capability requires it to have a fair understanding of all the areas of capability requirements in the organisation else there is no way they can organise the people development programs.


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