The business trek

Solid knowledge of marketing, finance and business strategy are essential steps on the way to the boardroom. HR practitioners ignore them at their peril.

It is one of the trendiest of business clichés: “People are our most valuable resource.” But the thing is, it’s true. Few people dispute it and that is why so many HR pros find themselves in more visible roles today.

But lest HR get carried away on a surge of self-importance, remember: a lot of your peers in other functions still believe HR is way too nebulous, and they don’t like that. They’re not comfortable with the intangibility of HR policies and are frustrated by spending money on HR programs that may or may not support operations.

It is true that HR is increasingly sitting in with senior decision-makers, but that doesn’t necessarily mean they are being treated as equal business partners yet. The reason, says Courtney Pratt, HR practitioner turned CEO, is that a lot of people are still skeptical that HR has anything meaningful to add.

Often HR people sit in the room and they kid themselves into believing they are playing an important role because of their position on the org chart. “They are there but not really there,” he says. Because they don’t fully understand what is going on in the business, the other functions don’t take them seriously.

Too often, HR is perceived as that guy who sits at the table and never says anything. “In a lot of cases the perceptions are real because a lot of HR people don’t understand the business,” says Pratt, the president and CEO of Hydro One Network Services, in Ontario.

“I’ve always said you’ve got to get in the room but once you get in the room you’ve got to get in the game.”

This means HR professionals must learn to walk and talk like the people in other functions.

“It is absolutely fundamentally important and the lack of that is probably the reason why they don’t get the respect they should have,” says Pratt.

That is not to say this isn’t a very important time for HR — on the contrary.

“This is potentially a golden age for HR,” he says. The problem is that a lot of people in human resources think they have what the business needs to survive and now they’re just waiting for everyone else to realize it.

But they may end up waiting a long time, because the chiefs don’t want to learn HR-speak, they want HR to learn the language of business.

Like Pratt, Frances Randle spent most of her career in human resources before making a move into a chief executive office at Career Edge, a national non-profit organization that works to enhance the employability of young people.

She says that HR often gets away without knowing more about business because they champion such “feel good” causes it’s hard for people to say no even if the actual benefit is unclear. For example, HR might decide they want a recognition program to make employees feel better about themselves.

“It’s a concept that is soft and fuzzy and people think, ‘Gee, how can we say no to this?’ It’s like saying no to motherhood.” But if HR then takes over a recognition program without a clear understanding of the behaviours the business units need to promote, it can be a disaster, she says.

Randle eventually tired of not having the same respect and credibility of other departments.

“After about 20 years, I came to realize that I have a lot of responsibility but not a lot of accountability. I didn’t like that. I wanted to be held accountable for the bottom line, ” she says. “I wanted to be the decision-maker. I didn’t want to just be a support function.”

On top of a lack of functional business knowledge, a lot of people in HR simply think differently about business than other departments. It is HR’s job to act as the protector of employees, she says and that is an important role. However a balance has to be struck between the idealism of HR and the pragmatism of bottom-line driven business decisions.

“When I was in HR I always wanted to give employees the benefit of the doubt. To save them some how,” she says. But presidents sometimes have to be more prepared to cut losses, deal with bad situations swiftly and get on with it.

There are all kinds of good, progressive-sounding theories that HR likes to talk about.

“But the bottom line is you have to be very practical,” says Randle. “Is this going to work here? Does this make practical sense to do it?”

This is not a new. The message has been out there for a while and yet the problem apparently persists.

More people are talking about the need for HR to learn about the business outside of HR but Gisele Dupuis, chair of the professional development committee for the Human Resources Association of Nova Scotia, says the action hasn’t yet caught up with the talk.

“I don’t see that happening a whole lot,” she says. “I think HR professionals focus more on HR and forget about focusing on other functions.”

And yet, increasingly companies only want HR people who can talk the talk outside of HR.

The most successful candidates these days are those that have demonstrated a strong business acumen, and who can demonstrate HR policies that are aligned with the business strategy, says Janice Kussner, a partner with the Toronto-based search firm Herman Smith Inc.

“There is no question that when it comes to HR leadership at the middle and upper levels, organizations want people with a business perspective wearing an HR hat.”

Anyone in HR has to demonstrate that their accomplishments are tied to the strategic plan. And they can only make that connection if they have a solid understanding of what is shaping that plan in other departments.

Pratt, who left a vice-president of HR position with Noranda to become CEO at Hydro One, got his start in HR at Dawson College in Montreal, before moving into consulting.

It was this experience that really exposed him to other aspects of business. Not in a theoretical, academic way but in a very practical way, he says. By working on a large number of multi-disciplinary projects with specialists of other functions, he learned more about business strategy and where HR fit in to overall operations improvement.

That seasoning gave him the credibility to move into a strategic senior position with Royal Trust in the mid-80’s where he played an instrumental role in introducing a cultural change to transform the organization from “a sleeping giant” to a “dynamic customer and sales-oriented organization.”

HR was a part of the development of the vision for the company and putting together the plan for organizational change, he says.

They completed an overhaul of the compensation plans with particularly innovative measures introduced for the sales force where a much greater emphasis was put on incentives. Practices from outside the financial services sector were brought inside the financial services sector for the first time, he says.

New training and development programs replaced the old programs to ensure staff were able to operate in the new culture. The idea was to help managers understand what the culture would look like and where the company was going. If managers didn’t think they would be comfortable, it was suggested they move on.

While formal education is certainly helpful, it is by no means essential, says Pratt.

“I’m not suggesting a lot of this comes from courses,” he says. “I’ve learned a lot from reading and just getting out and talking to people about the business.”

Many human resources professionals spend way too much time in their office instead of going out and talking to the line-managers and other executives who are running the business, he says. Simply reading the Report on Business, or the Financial Post everyday gets HR people accustomed to the language of business and will make them more comfortable going out and having those conversations.

Randle studied economics and psychology at university and has taken other executive development courses, but she agrees that the most important thing HR can do is get out of the office and talk to other departments.

The key is to learn how their businesses operate, what their key drivers are, and what they were trying to accomplish. “If you are going to gain respect from peers, the first step is being able to relate to the issues that are of interest to them.”

She made a conscious effort to do that while she was in HR and that is one of the biggest reasons she was able to move into a general management job with Career Edge. “I spent time with them and the people that work for them so I could understand how they run their business.”

HR people really need to study things outside of their HR role if they hope to gain the respect from other departments, she says. There are a lot of people who are great at HR but that isn’t enough.

Many people in other departments don’t know about other functions, says Pratt. But the finance and operations and sales people have always been part of the main thrust of the business, HR hasn’t.

They have work to do to convince the chief officers that HR can make a valuable contribution. HR can only get better at what it does by learning about things other than HR.

Get out of the office, says Randle. “Spend time in the business, and go out and study things that don’t have anything to do with HR.”

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