The removal of the HR director at confectionery retailer Thorntons induced a handwringing response among HR professionals, characteristic of the profession ever since management expert Peter Drucker accused it 50 years ago of lack of purpose and contribution.
The CIPD study, ‘HR: Where we are, where we’re heading’, provides a more positive picture. Well over half of the 1,300 participants felt the function was playing a more vital and strategic role. And while 43% of HR departments had increased their staffing in the prior three years, far more had reduced or outsourced activities.
According to one participant: “HR is taking on new importance as companies realise shareholder value is not what gets people out of bed.”
Business, it appears, is coming to the HR function. But the HR function is also going to the business, with the route to salvation, according to three-quarters of our survey respondents, being found in two words: business partner. “As an HR business partner, working closely with board members, you’ll be turning their business objectives into people plans, driving changes in organisation and working practices, transforming the way we deliver customer service.” So gushes a current recruitment advertisement from a major retailer.
Michigan University professor Dave Ulrich, in his 1997 book, Human Resource Champions, outlined the concept, describing, based on some US case studies, the roles that modern HR professionals need to play to realise their value and ensure their employer’s major asset - its people - are effectively managed to deliver competitive success.
In a forthcoming guide, the CIPD looks at the reality of the business partner, underneath the job title, in UK organisations. Its core components are aligning people management with the business strategy, and as one HR director told us, “understanding the business so as to deliver effective solutions to maximise performance”.
Patricia Lesley plays the role for the marketing function at Prudential. She describes how she “works with the business heads, agrees key issues, pulls together the recommendations of HR specialists and co-ordinates delivery”.
For Niccy Porshke at Vauxhall’s Ellesmere Port plant, a typical day might involve co-ordinating a group problem-solving session on quality, discussing absence levels with supervisors, and planning out coaching needs and career moves. So what’s new you might ask? This focus on business understanding and line management relationships, along with an emphasis on measurement and showing the return on HR investments, are key characteristics. The Royal Bank of Scotland achieved savings of millions of pounds after its staff training programme supported the smooth introduction of a new branch IT system. Organisations such as the Prudential and Shell have also revamped their training programmes for HR staff to focus on areas such as business acumen.
High administrative efficiency and ensuring that line managers actually carry out their people management responsibilities also appear to be essential characteristics, enabling the HR function to carry out its proactive and strategic role.
And as one HR director told me: “You can’t be a business partner on the quiet.” Rather than just ‘chummying up’ to directors and line managers, as Robert Myatt of Kaisen Consulting puts it, “the function is moving away from taking orders, to having the power and confidence to challenge” prevailing management styles and practices. Dave Ulrich calls it “HR with attitude”.
Taking part in a debate last month on business partnering at the Institute of People Management conference in South Africa, a country with such huge economic and social challenges, illustrated the global applicability of the concept.
But it also highlighted that the ultimate test of its success will not be how many HR directors get to sit on the boards of UK companies. It will be when companies are able to give positive answers to questions such as: why in our strong economy do we still have to poach skilled workers from developing countries? Why is the representation of women and ethnic minority groups on the boards of our major companies still so low? And what has been achieved by the significant increase in pay differentials between the highest and the lowest paid in the past 20 years?