Does your C-Suite understand the value of HR? Too many don’t, according to a new survey from the American Productivity & Quality Center.
Elissa Tucker, principal research lead, human capital management at APQC, spoke with StrategicCHRO360 about the group’s findings. APQC is a Houston-based nonprofit that provides information, data, and insights on benchmarking, best practices, process and performance improvement, and knowledge management to more than 550 member organizations worldwide.
HR functions have been striving to be more strategic, value-adding partners with the business. What are the top challenges that HR leaders face in this pursuit and how can they overcome these challenges?
In a recent survey, we asked HR leaders to identify the top barriers to their HR function making a bigger or better contribution to business goals. Among the most common responses were business leaders being too focused on cost, business resistance to HR change and business leaders not understanding the value of HR. There are some critical steps that HR leaders will need to take to address these barriers to better performance.
First, HR leaders will want to tightly align HR and business strategy. When the HR strategy is tightly aligned with the business strategy, it ensures that the HR budget reflects business leaders’ top priorities. In turn, business leaders who see their interests strongly reflected in the HR budget will be more likely to view HR spending as an important investment as opposed to a cost to potentially be cut.
In fact, previous research from a range of sources has linked having a well-designed and executed HR strategy with competitive advantage, improved financial outcomes and superior shareholder returns. In our recent survey, we found that the top performing HR functions had tighter alignment between their HR strategy and business strategy compared to other HR functions.
Second, HR leaders will want to foster collaboration between HR and the business. Collaboration can also help HR deal with cost-focused business leaders who do not fully appreciate the value of HR. Through job rotations within the business, HR staff learn about cost management from the business perspective, while gaining insight into what the business would find most valuable from HR. In addition, job rotations provide the business and HR with more opportunities to interact. The relationships that are formed become powerful enablers for current and future understanding about how HR adds value to the business.
Third, HR leaders will want to support HR staff in using data and analytics to communicate with the business. Data and analytics are powerful tools for HR to better demonstrate its value to business leaders and put to rest any unjustified concerns about HR’s cost management capabilities. Data and analytics lend credibility to HR and provide discussion points, challenges and opportunities for HR leaders and business leaders to work through together. Analytics capabilities are also an effective means for identifying new opportunities for HR and workforce-related cost savings.
Finally, HR leaders will want to position business leaders to become HR change agents. When HR changes are aligned with the business strategy and what business leaders see as their priorities for HR, business leaders will be more likely to champion rather than resist HR change. When business leaders also understand the value that HR investments will generate and are confident that HR is generating this value in cost effective ways, they are more likely to become the strong agents of change that HR needs them to be.
Many HR functions are in the midst of transformation that involves technology shifting how HR works and how the business works with HR. Does HR have the skills needed to make this transition?
Skills gaps are a challenge for all HR functions. Our survey found gaps in both newer and traditional HR skills. The top HR skills gaps that we uncovered are analytics, cost management and HR expertise/skills.
How can HR leaders ensure that skills gaps don’t hold their teams back?
Our research points to steps that HR leaders can take to close these skills gaps. Above all, leaders can provide more development to HR staff overall. Our survey asked HR leaders to select all of the HR development opportunities they provide. Even the most popular approaches had only been adopted by about half of respondents. So there is a clear opportunity for all HR leaders to expand their development offerings for HR employees.
Leaders should make sure they provide development opportunities for each HR career stage. Organizations are missing an opportunity to support HR professionals as they progress through their careers. Only 39 percent of HR functions offer career paths, 37 percent leverage HR-specific competency models and 36 percent offer early-career HR development programs. While HR leadership development/high potential programs are the most common HR development offering, less than half of HR functions in our survey provide them. We also found that only 39 percent of HR functions in the survey offer leadership development for current leaders.
HR leaders should also consider adopting underused, yet potentially powerful development methods. We found that paid support for HR professional certifications and job rotations across the business are the least common development methods for HR. Paradoxically, they’re also two of the most effective approaches for developing early-career HR staff as well as emerging and current HR leaders.