The familiar arguments against HR criticize the name (human “resources” equates people with widgets), complain about the inconvenient layer of process-oriented details, and stereotype HR professionals as drones. It's all a setup for the well-worn accusation, “What value does HR provide?”
The answer: HR provides what the CEO wants provided.
It’s up to the CEO
A CEO and the HR function are uniquely, inexorably linked. HR actively touches every element and person in an organization. The CEO is the one person accountable for keeping all company functions aligned and moving in the right direction. And because the CEO is also the only individual who touches every element and person in an organization, HR should be the conduit that helps or hinders these vital connections.
HR is a reflection of how a CEO sees his/her role in leading the organization’s people and culture.
If a CEO is disinterested, HR operates only at the transactional level (policies, procedures, compensation, benefits, administrative programs, etc.) But if a CEO wants to elevate the organization and the people in it, HR is the ideal partner.
HR at its best
A CEO can use HR at its highest level--as the steward of the organization’s health, with the CEO holding ultimate responsibility for these standards.
Organizational health is similar to personal health. Think: over time, what does an organization need to do to stay in shape, maintain balance, move flexibly through change, develop muscle for creativity, and foster the nutrients for invention, honesty, learning, and growth? What does it need to start, stop, and continue doing? How does it call itself to account for habits that are not useful? How will it develop the resources (there’s that word again) to accurately simplify complexity, while having the strength to face complex things that can’t be simplified? How does the organization know that its people and culture are healthy and sustainable?
The highest calling of HR is to hold a mirror up to the organization so that it can become the best it can be. Not coincidentally, this is also the highest calling of leadership: to lead a group in accomplishing more than could be accomplished individually, with each individual achieving more than they expected of themselves.
To change HR, start with what the CEO wants HR to be
A CEO must know what he/she wants the people and culture of the organization to be, own the outcomes, and not compromise on hiring the best HR people possible. A CEO can limit HR to mediocrity, or require that HR soars.
When a CEO chooses mediocre HR:
HR does not report to the CEO. This is the clearest signal that HR is not a priority.
HR reports to the CEO, but is run by a mediocre executive.
The CEO “takes care of HR” by outsourcing it. While some HR transactions can be outsourced, organizational health can’t.
The CEO has no idea how to engage the issues of people and culture. No one on the board of directors does either, or, alternatively, they can’t be bothered to influence the CEO to shape up.
Of the CEO’s Top 10 Priorities, organizational health is number 14, which might as well be number 264.
The CEO pays lip service to HR, saying “our people are our greatest asset,” but, based on the CEO's behavior, the executive team (and most of the company) knows this is drivel.
The CEO allows members of the executive team to behave badly (bullying others, running fiefdoms, receiving special treatment, etc.). Nothing undermines HR more than a CEO who allows his or her direct reports to act in a manner inconsistent with what HR says are the standards of the organization. When this happens, the company will “believe” the executive team over HR every time.
In a company run by an enlightened CEO:
HR reports to the CEO, who feels the proximate pressure of being accountable for issues of people and culture, while holding the head of HR to the same high standards
The CEO understands that one factor completely within the organization’s control is how it treats its people. An enlightened CEO wants to take advantage of this tremendous opportunity.
The CEO knows that culture happens with or without an effort to steward it - and that an unattended culture is a disaster waiting to happen.
At the executive level, there is broad agreement and commitment to the strategy that the best teams win consistently not because everyone always gets along, or gets what they want; the best teams win because they have the best commitment to achieving the shared purpose together, because of and in spite of their differences.
Therefore, the CEO and the executive team personify the efforts to build organizational health, enlist the full efforts of HR, and courageously lead the way.
The CEO must chose
Another useful snapshot on social media describes an exchange between a CFO and CEO. The CFO asks, "What happens if we invest in developing our people and then they leave us?” The CEO replies, “What happens if we don't, and they stay?”
Imagine this: A CEO says, “I want to create and maintain an organization where everyone has an opportunity to succeed; with the highest standards of organizational health; that inspires everyone to contribute and grow; and allows to us to pursue our vision, achieve our current goals, and create new ones.” The head of HR replies, “I am right there with you. What are you prepared to do to lead this?”
BRIAN EVJE helps people and organizations lead change and growth. Brian is a Principal of Equipoise Alliance, an organizational consultancy, a Member of The Change Leaders, and an Executive-in-Residence at Astia, a global not-for-profit propelling women’s full participation as entrepreneurs and leaders in high-growth businesses. He is a graduate of Santa Clara University, and the Master’s program Consulting and Coaching for Change at HEC School of Management, Paris / Saїd Business School, University of Oxford.