Splitting HR in 2 (HR Leaders Talk)

Should HR have 2 separate strands for administration and strategy?

Stephanie Fennell global HR director, Taxi
Based in Toronto, the 220-employee ad agency also has offices in Montreal, Vancouver and New York

There’s an administrative process orientation to HR but there’s also a strategic side, and it’s the role of HR to deliver both, according to Stephanie Fennell, global HR director at ad agency Taxi in Toronto.

So it doesn’t make sense to divide the department along those lines.

“Any role in HR offers the opportunity to be strategic — even if it’s an administrative HR role, it offers that opportunity,” she said. “We have opportunity, HR people at all levels, to help improve things, so I don’t think it’s something that should be split.”

Dividing HR would not necessarily give HR’s strategic side greater recognition, she said.

“It’s our responsibility as HR professionals to approach our roles with that mindset. We have to approach it as being strategic and not just processing paperwork and not just being administrative. It’s how are you adding better value and what are the business problems and if you don’t know about them, it’s going out and speaking to people to figure out what it is and how we can help.”

To be a part of the C-suite, it’s about actions, it’s about asking the right questions and coming up with solutions, said Fennell.

“By that — contributing, solving things — you do get a seat at the table,” she said. “If you’re just going to approach it as coming in everyday and getting 10 performance reviews done, check that off the list, get health and safety sorted and go home at the end of the day, without thinking about what are the true business challenges then, no, you’re not going to have a seat at the table.”

As for the suggestion CHROs are too process-oriented, Fennell said she has met many heads of HR who are quite impressive.

“There (are) some in various levels of HR who can get weighed down in process and start losing sight of the bigger business needs but when that happens, we need to stop and refocus our attention so we’re not losing sight of that. There’s always going to be that process, reactionary aspect to HR —just given we’re dealing with people and everyday something else comes up — but I think it’s always important to keep the bigger picture in focus.”

There are pros and cons to becoming the head of HR by rising through the ranks or coming in from the outside, said Fennell, who has been at the 220-employee company for two-and-a-half years.

“But if you’re not coming up through HR, you need to have a background understanding of HR, so training or education… so you’re just not walking into it cold because then you’re going to miss some of the aspects of it which could be more administrative but are important in getting things done, being compliant and all that good stuff.”

And if a CFO needs HR administrative information, he can still ask it of those functions, she said.

“The CHRO would be lacking in key HR admin info if they didn’t have that group reporting up to them in some format.”

As HR professionals, it’s important to have knowledge on the finance side of things and to be a part of those discussions — instead of just leaving it to finance, said Fennell.

“In all my roles, I’ve always had a very close relationship with finance and really think of them as partners — we work together and come up with things. And there are times when, yes, you will butt heads, so to speak, as to which approach to take, but it’s working together to balance the two, the people and the financial side of things.”
Valarie Dillon executive director of HR and volunteer services, Scouts Canada
The Ottawa-based organization has upwards of 600 employees and 25,000 volunteers

When it comes to the notion of splitting human resources, Valarie Dillon is not entirely opposed to the concept.

“That’s certainly one way of doing it and I would say that if the organization is resourced well enough to be able to do that, it’s certainly not a bad idea. Typically, though, most HR leaders will organize or structure their own department such that that split naturally happens anyway or to the best you can with the resources that you have.”

It’s something to consider, said the executive director of HR and volunteer services at Scouts Canada in Ottawa.

“Not that any other department is organized like that — I don’t know why we would hold HR out separately but, yes, why not?”
Scouts Canada has done something similar, carving off its administrative side, said Dillon.

“The focus then becomes less transactional and more about partnering to meet business needs,” she said. “It exposes the value of what HR can deliver as others begin to appreciate it’s far more than being about paperwork.”

While there are definitely some leaders of both operations and finance departments who are very capable individuals, they tend to have a bottom-line focus, said Dillon, who’s worked for the 600-employee Scouts Canada for about four years.

“You can’t necessarily be driven by the bottom line. Obviously, you’re going to be looking at whether it contributes to the bottom line, etcetera, but sometimes there has to be a trade-off.”

Splitting HR might give it greater recognition on the strategic side, if you’re resourced to do this, said Dillon.

“At the end of the day, whether you split or not, it’s the results that are going to get you the recognition and you should be able to do that, regardless of the split. But perhaps it would help,” she said. 

“It’s quite often the people you have in there, so it’s kind of up to all of us to bring HR up a notch and to make other business leaders aware of the value that we can contribute.”

In an ideal world, those who work on strategy would love to only work on strategy.

“(Strategy) is a large part of my role but there’s never enough time. But, yes, it is a large part of my role and we have structured ourselves to support that distinction.”
Megan Paterson  director of human resources at Kinaxis in Ottawa
The 290-employee software company has offices in 9 countries

A 30-year-old company, cloud-based software company Kinaxis just went public in June on the Toronto Stock Exchange, so times are busy. And Megan Paterson, director of HR, has a lean team of nine to manage human resources for employees in nine countries.

“So what am I spending right now on strategy? I would say maybe 10 per cent on strategy. What should I be doing? Sixty, at least, 60, 70…. I never want to be off in a corner just working on strategy — that, for me, doesn’t work, and I think that’s why I’ve always been attracted to smaller companies.”

However, Paterson doesn’t think it makes sense to split HR into two areas, one dealing with strategy, the other with administration.

“I like it being together because then everybody in your team can see that they at least get exposure to the strategy side and they can learn from it and it teaches them to be better business people, whereas if you separate it, my concern would be you’ve got some people who truly are paper pushers, doing the admin, the tactical part of HR, and it’s almost like you’re creating two silos within HR.”

Inherently, as people move up through the ranks in HR, that happens anyway, she said.

“So if you’re at the VP level, you’re doing way more strategy than your recruiter is, and that’s how it should be, but you’re on the same team, and hopefully you’re having communications and you’re talking so the people at the lower levels still get that insight and the glimpse, or how else would they learn and eventually get there if that’s something they wanted to?”

As for the suggestion many CHROs are process-oriented generalists who don’t relate HR very well to real-world business needs, Paterson said she hopes that’s changing.

“There are a lot of crummy HR people, there are — very old school… their goal is just to make people happy, they couldn’t even describe what their business does, and it’s a shame. I feel like we’re moving away from that and as we get more people coming into the field and we’re talking about it, hopefully they’re learning from more innovative, business-minded HR executives,” she said. “But I can’t disagree that a lot of CHROs are process-oriented… I can’t tell you how many people I talk to who don’t even know who they compete with. That’s astonishing to me.”

CEOs these days are definitely expecting more from HR, said Paterson, who’s been at the 290-employee company for four-and-a-half years.

“What we’re expected to do now compared to 15 years ago when I started is very different and I think it’s twofold. I think it’s partly because we as HR professionals are pushing for it and saying, ‘We can do more, we can give you more.’ And, as we get traction there, CEOs are saying, ‘Perfect, give it to us. This is what we want.’”

However, HR education could be improved to focus more on strategy and look at the whole business, versus being very heads-down, she said. But, regardless of size or sector, HR can be a strategic partner.

“The HR people need to want to do it and show an interest and have initiative and really grab onto it and push for it because we’re not all fortunate to work for CEOs who think HR is important. 

So that can be a struggle — you’ve got to keep trying to prove your worth and, if you’re persistent, keep trying to do it, you’ll eventually get through.”
TJ  Schmaltz vice-president of human resources at Impark in Vancouver
The company has about 5,200 employees in Canada and the United States

There’s no question HR has evolved significantly from being very transaction and process-oriented — your typical personnel department handling hiring, firing and payroll — to dealing with complex people management, greater legislation and requirements, managing benefits, change management and organizational design, according to TJ Schmaltz, vice-president of HR at Impark.

But that doesn’t mean the department should be split in two, with one side focused on strategy and the other on administration.

“If you start going down that path, carving out the strategy and separating out the admin, you’re losing one of the most important evolutions of the HR profession. And that is, in my mind anyways, that HR activities are closely tied to the business and the business strategies. So I think if you were to go down that path, you’d actually end up creating something similar to what HR was originally viewed as — that personnel department that is very transactional and not particularly tied to the business function.”

HR’s role in organizational strategy is critical because we’re talking about the people side of the business, he said. 

“I actually don’t see how you could effectively separate the two functions because the transactional and administrative should still be tied back to supporting the business and (business) strategy.”

There are some process-oriented CHROs and vice-presidents who are doing a disservice because they’re not necessarily demonstrating what HR really can and should be doing, said Schmaltz, who has been at Vancouver-based Impark for six months.

“But there’s a lot of folks that are switched on out there now,” he said. “The credibility of an HR professional really rests with their ability to speak the same language of the business they support and to link the activity back to the business objectives and the strategy, and provide solutions to the business.”

However, Schmaltz does not spend as much time on strategy as he’d like.

“You get drawn into the operational more than probably you’d like, but I’d still say the majority of my job or my work is looking at the bigger picture,” he said. “If you don’t spend the time thinking strategically... you’re going to fall into the trap of being reactionary and very operational. You constantly have to keep pushing. My mantra is that you have to understand the bigger picture in terms of what good looks like and where you’re headed.”

One key thing that is still absent from a lot of HR departments is the ability to measure or quantify the connection between an HR activity or outcome and the business or strategy, said Schmaltz, adding there’s been discussion around this when it comes to the Certified Human Resources Professional (CHRP) designation and the National Knowledge Exam in pushing for more rigour to understand finance principles and metrics.

“To achieve results in the HR, HR professionals must now exercise a greater degree of business savvy, people savvy, persuasion, diplomacy and tact… I sometimes refer to the HR department as the diplomatic core of the organization.”
Rann Sharma  Toronto-based global head of culture, Free the Children
The charity has about 350 employees in North America and 400 overseas

These days, CEOs are definitely expecting more from human resources, according to Rann Sharma, global head of culture at Free the Children in Toronto. And that’s been evident at her employer of nine years, which has grown very quickly.

“What started off as very transactional activities — you know, personnel management, staff files, things like that — quickly grew for us to be able to evolve very quickly,” she said. 

“The legislation side is very important, the guidelines, the so-called industrial relations are very important but, as the business has grown, our CEO has needed our HR team to understand how the business works. That’s really, really important… I’ve worked very hard to ensure that we’re not seen as a transactional department but a strategic one.”

At Free the Children, the role of HR has always been about facilitating business activities, understanding where the opportunities lie in these areas and helping facilitate that, said Sharma, “while also ensuring that we’re being compliant and we’re taking care of all of those other transactional pieces.”

Fortunately, the organization appreciated the role of HR from the start, she said.

“I always had a place at the senior leadership table so I could learn about the type of business growth that we were hoping to achieve, the type of people that we needed to hire to be able to make that happen; to be able to understand the evolution of our markets, and to be in discussion about what’s happening and what is the value of what we’re hoping to bring? So, to me, that’s a fundamentally different piece than checking off someone’s health and wellness form which, again, is very important but, at the same time, when we’re trying to build and develop business goals, the people aspect, the people strategy is very crucial to that.”

But are HR professionals ready for that? A lot of the new graduates are still holding onto the transactional pieces, said Sharma — even though those are important too.

“A lot of HR professionals that I’ve interviewed have been in a corner somewhere, far removed from the business, far removed from the day-to-day activity, operating in a silo.”

Recently, the HR department at the 750-employee charity was split in two, with one side devoted to people operations and the other devoted to culture. Formerly the director of HR, Sharma now heads up the culture side.

“I saw an opportunity in saying, ‘Just as we market to our customers and we market to our clients and all of the external pieces and we have a very developed brand and people really understand us one way… wouldn’t it be amazing if we could take that same lens and that same approach to our internal stakeholders, our staff?’” 

If HR really wants to be seen as a strategic business partner, it needs to understand what it is the CEO wants to do, what senior directors and hiring managers want to do, and almost be a chameleon, said Sharma.

“This is what I think is lacking a bit because you have to be dynamic enough to convey a sense of care and passion for the people strategy, but you also have to understand that, at the end of the day, it is a business that you’re trying to move forward and you’re trying to grow, and understanding all your stakeholders is very important. And, I get it — the legislation and the compliance is so important but I think sometimes people get stuck in that and it roadblocks everything else.”

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