Strategic HR – Is That Realistic?

Be A Power Station Instead

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Dave Millner
11/05/2019

Strategic HR – what does that really mean? HR has been striving for this for some time and I’m not sure the function is trying to strive for something that is really attainable – after all who in any organisation is really strategic every day? From my experiences, strategic HR is always partly corporate driven and partly operational anyway which to some extent is contradictory; my preference would be for HR to focus upon being commercial – that’s a 365 day a year challenge and has immediate impact on business outcomes and once that can be demonstrated then guess what, as if by osmosis you then seem to be regarded as being strategic! That’s why the analytics journey is such an important one for all HR functions if they are truly serious about being an 'added value' function that has a real impact on the bottom line!

Often when HR professionals accept their strategic role in helping to build a performance culture they also point out that it’s inappropriate to expect them to manage workforce productivity because the actions of managers and employees have such a greater operational impact than that of HR. I accept that, but sometimes if HR wants to be “strategic” (whatever that does mean) then that usually, in my mind, means taking responsibility and ownership for things, even if you don’t have total control over that aspect.

Strategic HR means…

Being “strategic” means producing results that impact upon critical business objectives and that means if you want to take credit for some strategic result, you must first assume some degree of “ownership” or accountability over that strategic area. HR needs to assume responsibility and ownership for employee productivity, so that when productivity improves, HR can take credit for their part in the accomplishment by demonstrating the data that backs this up and the enabling activity that they have changed etc. that has driven or contributed towards the change. Unfortunately, all too often HR professionals want to take credit when productivity is high (i.e.; positive results are available) but are reluctant to accept that responsibility when the data says that things haven’t improved. That’s the business challenge you face when using data and analytics to show your value – numbers can go up and down and, for me, using data is the way to show why something has happened rather than focusing on the immediate impact on the HR function of those reductions. That’s the commercial world that every business manager faces each day. To truly maximize this approach HR needs a large dose of courage and self-confidence.

Many people equate being strategic with having some degree of formal authority or control but there is really no automatic connection between the two. Strategic individuals seldom have as much power as they would like. For example, in most organisations the Chief Financial Officer (CFO) takes responsibility for all financial actions but in fact, has little direct power over how the budget and finances are spent. CFO’s take responsibility for the things they have determined to be important to the success of the organisation, even though in most cases, they do not have total control or power over the entire situation.

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In a similar light, even though HR is classified by some as a support function it cannot use this ‘lack of control’ excuse if it ever expects to be considered a strategic/commercial function. Strategic individuals, rather than making excuses “find a way” to influence others, so that the net result is that people together move towards a common goal or business outcome. Taking responsibility for things you don't completely own or control is known as leadership.

Non-strategic individuals in HR take a narrower perspective and accept only the responsibility for the “operation” of the people management systems. This narrow view guarantees you will not be considered strategic because the very definition of strategic moves beyond taking responsibility for the “operation” and instead focuses on taking responsibility for the “results” or “business outcomes”. If you accept this broader view that HR is responsible for the “output” or results of the people management practices (not just the operation of the systems), then you are already taking a broader more strategic view of HR. If you assume the leadership role and all the complexities that go with that, you must move beyond accepting responsibility for the operation of all the people practices and systems and you must add to that the broader responsibility for the actions and the performance of the employees, which were recruited, trained, rewarded and appraised by using those systems. This is where the influencing role of HR becomes critical in working with line managers and leaders so that collectively they can “execute” and produce the highest level of productivity.

A Power Station Approach

HR needs to move to being more of a Power Station - a function that whilst not always high profile is a core necessity of life and is truly appreciated because of that fact. Just consider the uproar when power cuts occur! Currently HR seems to be content to be a Service Station that people can call on when they want - that's fine but if the aspiration is to be more strategic then guess what? The requests for support with that approach will always fall into the operational support category.

Power station HR functions are truly business focused, share accountability for performance with line management and leaders and focus on both the short and long term efficiency and productivity agenda. They are proactive and focus on continuous improvement that focuses on tangible bottom line improvements (growth or significant cost inefficiencies), all of which are underpinned by a robust business planning process that is stretching the boundaries and expectations of both HR and the business. Finally, the whole focus is upon delivering value to the internal and external customer, all of which has a 'future proofing' approach to ensure their service and solutions remain 'fit for purpose' at all times.

The strategic HR dilemma isn’t an easy one. For me though -- focus on the commercial outcomes that the organisation wants. Support and improve that (as many HR functions already do) by demonstrating the value through data and analytics. Doing so means the label of being strategic or commercial will be irrelevant because HR will have shown their “value add”. This is something that we all aspire to provide and something that a Power Station mentality can provide!