The problem for most human resources professionals is that, traditionally, they haven't even been allowed near the car, much less asked to get in it. But things are changing. Companies are finding that they need their functional experts working together to get
their businesses rolling in the right direction. For HR professionals, this means they must work directly with line managers and business operations directors to solve business problems.
HR managers are increasingly taking their place in the great business race. They're hanging out the windows with the other executives while they all change the tires. It's called business partnership. And it's making sense in today's business environment—not just for HR, but for every business function. It's happening because business leaders think that having their functional leaders working together more closely is important for the business, not because any particular functional area feels left out.
Many examples of how HR departments are becoming business partners may sound familiar in their mechanics, because they often use such tools as reorganizing, reengineering and personnel attitude tune-ups. But when human resources mechanics use all these tools together in a focused effort, they start to sound like strategy, purpose, direction and impact on an organization with far-reaching implications on the bottom line. This, after all, is what being a business partner is all about.
HR retools to become a business partner.
The idea of HR as business partner isn't new. "It's a role that has been talked about for 15 years, and now is becoming a reality," says David Ulrich, a professor of business at the University of Michigan's School of Business in Ann Arbor. "Companies now are finding that the HR issues are, in fact, center stage to business competitiveness. The intellectual capital, core competencies and organizational capabilities are all the pieces that are central to success. HR folks have known that for a long time," adds Ulrich. "I think that we, as an HR profession, are moving [toward] that. It's an old role in terms of discussion; it's a new role in terms of practice."
Says William J. Conaty, senior vice president of corporate human resources for General Electric: "I think what's key from a human resources standpoint is anticipating the business needs and trying to define and create what really adds value to business performance." To do that, you have to already be in the car, ready to diagnose shortcomings and deliver solutions as you're rolling down the road.
Conaty adds: "I have no problem getting to the [leadership] table. And when at the table, you're expected to add some value." He explains that personnel issues aren't as clearly defined as they once were at his company because they're more interrelated with the business than ever. But HR hasn't always played such a strong partnership role in the business. That has changed through a series of financial problems, downsizings and restructurings. "Usually where there are business issues, it doesn't take too long as you peel that onion back to find that there are people issues involved in inhibiting progress." The company has had to look at people issues as an integral part of the business, instead of as a side issue.
How do you begin to move toward business partnership and help diagnose business needs? According to Marilyn Condon, program manager for the internal consulting workshop for Personnel Decisions, Inc. based in Minneapolis, there are three important areas to focus on when trying to become an internal consultant. Like three legs of a stool, they are: 1) becoming a business partner; 2) building relationships with business-unit managers; and 3) establishing credibility in the organization. All three are interrelated and often are accomplished simultaneously.
HR partnering often starts with a reevaluation of HR's role and whether the personnel department is actually adding value to the business where the business needs it. While an HR department can spin an intricate web of programs and policies that it thinks are invaluable to their organizations, the trick is to figure out whether the web actually effectively supports the business and holds the people processes together.
For example, the human resources strategists at Clorox, the Oakland, California-based company that makes such products as Clorox® liquid bleach, Combat® insecticide and Formula 409® spray cleaner, are quickly becoming more strategic business partners through a new HR strategy and a new attitude. Clorox's personnel department got its first wake-up call three years ago when a survey of the company's top executives revealed that the human resources department had finished dead last when it was evaluated against other key functions in the company. The survey further determined that not only was HR not adding value to the company's operations, it was also failing miserably in many of the more basic HR areas such as being accessible to employees and keeping up with their changing needs. Just as being rated number one is a moment you'll always remember, being rated last is a moment you don't soon forget nor easily shrug off as unimportant.
They devoted 20% of their time last summer to developing a strategy to become more business-partner oriented. This year, they're implementing the strategy, which has involved a reorganization of HR. "Although we were probably late in starting the reorganization [compared with other U.S. businesses], we have been like a heat-seeking missile in executing it," says Janet M. Brady, vice president of human resources. "It's like the tortoise and the hare—maybe we were late in starting, but we're right out in front because we're not just talking about it, we're actually doing it."
Consider Clorox's seemingly simple, but revolutionary, partnering approach. The firm's HR department of 92 people decided to change their structure from being simply HR generalists to being business-function specialists so their departmental organization matched the overall business structure. Instead of the human resources professionals being organized around HR specialties such as benefits, compensation or recruitment, they're organized around business functions such as marketing, sales and manufacturing. "We used to have a set of decentralized generalists supporting a division," says Brady. The problem was that divisions didn't necessarily share their best HR practices. Now, six senior human resources professionals are responsible for understanding and supporting the needs of each of the functional areas across all six divisions. Of course, one HR person can't handle all of a function's needs singlehandedly—even with the increasing generalist orientation that many personnel professionals are adopting. It's their job to be the HR broker. They gather and deploy the necessary HR resources, talent and skills from wherever they may be within the organization, and transfer them to their clients. This way, all HR processes are similar across all functions and divisions.
This means that if Larry Peiros, vice president corporate marketing services, wants to hire a new marketing manager, for example, he can go to the person in charge of HR marketing support and get help in hiring that new person, but he can also go to the same person to ask about changing the job-grading system for the marketing department. It's up to personnel's functional expert to figure out how to give that business manager what he needs. "We're calling them client managers," explains Brady. "Client managers handle the really senior-level, organizational issues and organizational diagnoses."
To get more time to be strategic, Clorox has reorganized the personnel department with a call center for its more basic HR services, such as answering payroll and benefits questions. It's new shared-services center houses the three centers of HR expertise—comp and benefits, human resources management systems, and individual and organizational effectiveness. "It's going to give us permission to play in the areas that we feel are more strategic. But if you don't get someone's paycheck out on time, [just like in football] if you don't do the blocking and tackling correctly, then you're not going to get the long ball. So we wanted to make sure that we do a really good job in the fundamentals of HR; then, over time, we will be respected more and be allowed to play in more strategic business issues," says Brady.
For example, although Brady isn't on the company's executive management committee, she was instrumental in helping them develop the firm's new "people strategy"—a vision statement about how the company and its employees will work together. It aligns business needs with people needs so that the business can move forward quickly. Brady not only sat in on all the meetings to form the people strategy, she actually managed the meetings and guided the group on the human resources issues with advice from her HR staff. "We were able to flow input upwards and say, 'Here are the programs that make sense.' Historically, we might not have played in that arena as much," says Brady. And because HR is sitting at the strategy table, decisions about people-related issues are getting made faster. "We deploy HR programs like lightning now," says Brady. For example, the people strategy was finalized at the end of January and rolled out at the end of February, including all collateral materials to all the company's 4,800 employees.
If you break down her HR team's strategy to the simplest common denominator, the key for Brady's HR group in becoming a business partner has basically been active listening—putting their HR ears to the ground to hear what people in the company are talking about. Brady is used to listening to people. Having spent 19 years in the company's marketing department before taking the top human resources spot two years ago, Brady had a strong bent toward listening to consumers before giving the go-ahead to anything new. "You have to listen to your consumers before you develop a new product," says Brady. "We've got to listen to our [people] and get that feedback and input in a way that maybe we weren't doing before. We were doing a lot of things in isolation. Now we're trying to do things in a context that makes sense."
There are other ways that HR is reorganizing to get closer to their business. Take Matthew Bender & Co. Inc., for example. The New York City-based legal publishing company is a subsidiary of Times Mirror Co. Matthew Bender has 1,000 employees spread out over three locations, two in New York and one in California. It was E. Lynne Pou, Bender's former vice president of HR, who decided last year to formally implement a personnel department initiative with which her department had been experimenting for several months. Through this initiative they call Primary Partners, each HR director partners with a line-department manager so the human resources person becomes one-stop shopping for all that line manager's HR needs.
"We had believed for some time that we ought to get out of the transaction business and into adding higher value to the groups that we worked with," says Pou, who has just moved over as an HR consultant to Times Mirror. Because Matthew Bender's parent company, much like Clorox, was implementing a call-center operation to take care of a lot of the financial, administrative, and payroll and benefits services for employees companywide, the subsidiary HR departments were being freed up to be more strategic. With her staff's help, Pou decided that they needed to learn more about the business, and the best way to do that was to get out and live with the line managers to see what made their departments tick. "One of the things that you have to do to be a legitimate business partner is to actually get in there and learn the business," says Pou, "and you can't do that by sitting in your HR office." She says that it's personnel's job to figure out if the organization has the right people doing the right things at the right time.
Mark Howe, director of human resources for the company's 250-employee Albany division, is the personnel professional who's the Primary Partner for the company's operations department. The operations group is responsible for customer service, credit and fulfillment. Last summer, Howe completely immersed himself in the operations department for three months, paying particular attention to the customer-service area. His assignment was to take an in-depth look at who the company's customers are, what their needs are and how the customer-service personnel were meeting their needs with the products and services they provide. Howe found that their customer-service employees were assessed around what he calls babysitting issues, such as attendance and number of calls taken per hour. What the department needed was more than just new annual review procedures; it needed a whole new set of competency and performance expectations and a comprehensive performance system to manage those new expectations—something Howe probably wouldn't have been able to assess had he not put in the time.
As a result of his in-depth look at the customer-service operation, Howe worked with the operations director to identify new behavioral expectations for the customer-service representatives that will help increase customer satisfaction and ensure future business success. These new expectations include expecting employees to take more initiative and to communicate better with clients. They have also identified specific ways to measure those competencies, and are coming up with training to help the customer-service reps understand and learn not only how to perform to those expectations but why they're important as well.
As a result, the customer-service reps now spend more time talking with customers to glean additional information. "It used to be that they just answered a call. The idea was how fast they could answer it and get on to the next call," says Howe. "Now they're trying to really dazzle the customer while they have them on the phone and maybe find out a little bit more about them and possibly sell them other products."
Did Howe have any background in customer service on which to base his recommendations? "No, and that's what was really scary about it," says Howe. He learned by reading a lot and talking to lots of people, both inside the company and outside the firm through benchmarking. "I was at a disadvantage because customer service was new to me, but I had an advantage because I knew the company well. So I used that advantage to go and talk to people to get their input about what they thought could be improved about our customer service," says Howe.
In fact, Howe thinks that personnel professionals have three key skills to help serve their organizations in unique ways beyond traditional human resources skills: facilitating, organizing and interpersonal sensitivity. "Sometimes, people just need help in organizing their thoughts, coordinating them and tying them all together," says Howe. And they want to do all of that in a non-threatening environment. "So I spend a lot of time at the white board, just kind of mapping things out and visualizing things for them, but they give the input."
How is the primary partnership idea perceived by line managers? "Before, the HR department was seen by a lot of line organizations as an administrator and a little bit of a policeman who would keep you from doing some crazy stuff in terms of compensation or hiring. They kind of kept the human rules in place," says Linda Reiss, vice president of operations for Matthew Bender. From her standpoint, Reiss says that the personnel department's Primary Partner initiative has been valuable in a couple of ways. First, the human resources staff now knows what drives their business, so if a problem comes up or if they need to make a change in how they're doing business, HR now understands from the line manager's position what's driving the need for that change. "That's very different," says Reiss. Second, Reiss points out that in a traditional HR department, HR often was put in the middle of personnel situations between management and employees. "HR's being a mediator wasn't in anyone's best interest," she adds. As HR professionals gain a more balanced view of the business, they're better able to balance business needs with employee needs.
Partnership is a two-way street: you must build relationships.
Although totally reorganizing how a department operates is one way to accomplish a systemwide effort toward becoming a better business partner, human resources departments don't have to make such large-scale internal changes to make a big difference as a business partner. Start small. Start with individual relationships. "The very first step we took was to find one line manager who needed help, who appreciated what we could bring to the party, and then we served the hell out of him," remembers Elizabeth Drewry, vice president of human resources for Newsday, a newspaper in New York City and a sister company to Matthew Bender. That was five years ago. At the time, that line manager was trying to transform his department from a sales focus to a service focus, and he needed assistance in training, selection, performance reviews, compensation and other issues that were crucial to the transformation. "We really worked hard for him. We did special training and worked with him on developing new ways of managing performance," says Drewry. The net result was that as other line managers heard how instrumental HR was in helping him achieve his business goals, they also starting beating down HR's door to get similar help.
Drewry also implemented another fairly simple, but effective, partnership strategy. At budget time last year, she initiated meetings between the company's key support departments including information services, administrative services, finance, and human resources, and each of the line-department managers, such as editorial, operations and marketing. During the two-day meetings, each support function found out what the main goals of their counterparts in the line departments were and how they could help them reach those goals in the following year.
Although all the function managers and department managers had met informally for these types of meetings in previous years, these expanded interdepartmental meetings served two important purposes. First, they formalized interdepartmental huddling—the process of transmitting information. Second, the support departments got in on the budgeting process at the front end, rather than at the back end, as was typical. "When we were done, we produced a document that was a guideline, so that we all knew what was going to be hot in advertising, circulation and the other areas," says Drewry. It particularly helped HR to be able to plan for personnel needs that the line departments were going to have in the areas of staffing and training. And money was dedicated early on in the year for those needs rather than trying to scramble to find it in the budget later, which had sometimes happened in the past.
Drewry says that the line managers were ready for this new kind of interdepartmental meeting because it was built on a string of good relationships that the HR department had been building in previous years. "Most line departments aren't going to come to a meeting that HR calls," admits Drewry. "It's got to be worth their while." You have to make it worth their while by building a history of HR partnering that directly supports the business. "We had a track record," says Drewry. "We invited people who were our good clients and then made it more valuable by bringing in the other support departments."
HR actually may be the most-qualified candidate for the job of focusing people's attention on certain issues. "I think HR often is in the best place to coordinate resources, to see the contribution that different departments can make and to get everybody focused in the same direction. It typically involves a lot of communication, such as having special meetings, seeing where the resistance is and figuring out ways to overcome it. In many ways, that calls on our special expertise because it involves working across departments," says Drewry. Those are skills personnel professionals have developed for years; partnering is just a more effective way of applying them directly to business problems.
For example, Martha Glantz, human resources director for Matthew Bender's New York City and Oakland, California, divisions, is serving as the Primary Partner to her company's editorial operations. When the Primary Partnership initiative began in January, Glantz initiated meetings with the publishing managers and directors for the western editorial operations. They identified the goal of streamlining the editorial department to achieve operational excellence that would support new pricing initiatives. The pricing initiatives were going to reduce prices, which would reduce revenues. Editorial needed to reduce its expense base by cutting jobs, but at the same time add more value to the products by making them more consistent across product lines and getting them to market faster.
"Before we initiated the partnership, I probably would have attended parts of those meetings. I would have come in and talked about severance and then I would have been invited to leave," says Glantz. Because of the partnership, Glantz actually acted as the facilitator and leader of the meetings. She was able to hear all of the discussions about how the department operated and gave opinions about new team groupings that might work better. "Where I played a key role with [the editorial directors] was that they're not particularly process people, so I kept them focused. I was their voice of reason and conscience and often was a challenger to what they were discussing," says Glantz. "I would bring up issues and ask them to be sure they had fully articulated them."
As the meetings progressed, she started to play more of an HR role and helped them to articulate what the jobs were going to be, talked about what the competencies would be for those jobs and articulated the selection methodology. "Then when we got closer to actually downsizing, I talked about the classic HR stuff such as getting the letters ready, doing the costing and severance," says Glantz.
In April, they reduced the editorial staff from 44 managing editors to 17, and from 160 legal editors to approximately 115. In the process, they moved from a hierarchical organizational structure to team models. "I've also kept them focused on what they're going to have to do to make these teams work," says Glantz. "I'm finding now that my suggestions, which I thought were falling on deaf ears, are coming back to me as if they were their own ideas." In the end, it doesn't really matter whose ideas are whose. What matters is that all the issues are discussed as the car is moving. Line managers are realizing that the people issues are among the most important issues, and it's invaluable to have the human resources voice at the bargaining table from the start.
"Sometimes it's helpful to have somebody who's not in the thick of things to facilitate meetings," says Reiss. For example, Reiss has discovered that having an HR representative in meetings helps when she's presenting new ideas to other departments or outside clients. When HR steps in with a thought on one thing or another, it adds more credibility to the discussion because it's truly a cross-functional discussion. "I think that's very helpful," she adds.
At Newsday, there's been a joint recognition by the company's senior managers and line managers that training is critical to business outcomes. "In the last couple of years, human resources has been a real business partner as far as making sure that we get the right kind of training," says Ed Hughes, Newsday's director of operations. Of course training is typically HR's responsibility. But in Newsday's case, HR has proactively partnered with the operations department to figure out what skills the department's staff was lacking, and has designed training to directly fill the gaps. For instance, they developed a training program to help managers and supervisors learn more about managing union workers, with specifics on understanding labor contracts. These were skills that many individuals didn't have after being promoted from the line into management. HR also developed training for the operations staff around problem-solving techniques. "Operations people are typically pretty good problem-solvers, but it's always good to get new techniques," says Hughes.
Hughes says he's seen the interaction between HR and line departments such as his grow more and more intimate in the last few years. "I think it's an indication that these [HR] folks are willing to spend the time to help us develop the right kinds of programs that allow us to improve," says Hughes, and adds, "I think that that partnership is critical if you're going to maximize the potential of your people and your potential as a manager."
Don't underestimate the power of building one-on-one relationships. Although a company is a monolith of departments, functions and groups, it's also a team of individuals who must work together. Should HR think about themselves as team members with line managers? Absolutely, says Personnel Decisions' Condon. "When it comes to building those relationships, it's important that [HR professionals] not only understand the strategy from the organization's perspective, but that they get to know the people that they're supporting," says Condon. Find out: What are their concerns and issues? What keeps them awake at night? One of the best ways for HR professionals to build relationships is to network within the organization, says Condon. (Please see "The Five Biggest Mistakes HR Managers Make In Business-partner Relationships.) Have breakfast with your counterparts in other departments. Have lunch with them or walk with them around their departments. But spend the time. If you help them with small problems now, they'll start coming to you with the bigger ones later. Eventually, they won't ask for your help; they'll ask for your advice.
Don't just spin your wheels; establish credibility.
Are HR managers consistently being asked to the business table? No, says Condon. "They're really struggling to establish their credibility and improve their value so that they will be able to get in when the strategy is being planned. They have to establish their credibility by being able to link their expertise to the business strategies and issues of the managers they support," she adds.
"You have to know your business," says Newsday's Drewry. Keep your language simple. "You can't be in there talking HR jargon when people want help. You have to speak the language of the line. You have to know your business well enough to know what's really going to move it ahead, so that you're not wasting your time on things that are peripheral to the true goals." The way you know your business is to make it a point to get out there and see what really goes on, she adds.
For example, before they formally implemented the primary partnership initiative at Matthew Bender, Glantz got out into the company's editorial operations and observed about 15 people in editorial actually doing their jobs. So, when it came time to talk about streamlining the operations, she understood what people did in that department and could make intelligent observations and recommendations for how to change things. Also, Glantz has been at the company for 11 years as a compensation specialist. "I've either written or reviewed every single job in the company. Over the years, [managers in the other departments] have gained respect for my technical expertise in compensation and some of the other classic HR stuff," says Glantz. "I don't think you're going to be able to go in and [change things] if they don't think you already know how to do the job that you've been hired to do."
Other human resources professionals establish their credibility by having line experience themselves. That's what GE's Conaty did. He's had numerous human resources and employee- and labor-relations assignments since he started at GE after graduating from college in 1967. But he also once functioned as plant manager of GE's diesel engine plant in Grove City, Pennsylvania. Now he reports directly to CEO Welch.
Having been in the top human resources position only for the past 20 months, Conaty says that he still has a strong bias toward staying integrated and close to the line operations. Since his arrival as the human resources leader at his organization, he has added a new segment to the HR department's leadership program, in which recently recruited MBAs spend two years in various personnel operations. Now, they also get experience in line functions such as finance, new business development, manufacturing or marketing. "What I'm really doing there is driving much more of that understanding of the business equation early on to some of our top future talent," says Conaty. "It will enhance the credibility of the individuals who do it and it will broaden their perspective dramatically."
Human resources experts say that your credibility stems from your ability to think and act as though it's your responsibility to run the business. "I hear a lot of people in HR saying, 'What do we do to get invited to the table?' Well, in my opinion, if you have to ask that question you don't deserve to get invited," says Matthew Bender's Glantz. "If you've done your homework, and you know the business and can give them some good, solid business advice, they're going to invite you. Then once you get invited, you'd better get up to speed or they're not going to invite you back."
You also build credibility by being grounded in reality. You can help change as many tires as you want to, but if you're not even in the right car, it's not going to further your business. "Some HR professionals mean well in some cases, but they do what I call navel gazing," says James B. Millard, managing director with responsibility for HR reengineering and change management for Boston-based Harbridge House, a division of Coopers & Lybrand. "They come up with these lofty ideas about what they think the HR professional should be and then somebody in operations or management asks the dumb question, 'Who have you talked with to confirm this role?' "
For example, he says that in one organization he's worked with, the HR department came up with a vision of having line management take more responsibility for human resources issues. It's a role that many HR departments are doing with great success. It sounded like a great idea, but HR never bothered to ask line management if they wanted to take on that responsibility, which, in fact, they didn't. "They hadn't built any commitment," says Millard. "As soon as the senior line managers heard about it, there was a mutiny and HR lost." They hadn't built commitment by first communicating their vision and getting buy-in from those whom it directly involved. From the line perspective, HR was simply dumping what they perceived as HR's job.
Lastly, it might sound simple, but you maintain credibility by keeping your promises. "Whatever you say you're going to do, you have to do," says Drewry. "[Credibility] is your most precious possession, because most HR people don't have huge budgets or the kind of power that the line people have. What you have is your reputation and your credibility. If you don't tell the truth, you don't have a job."
Says University of Michigan's Ulrich: "We need to talk less and do more. We need to write fewer vision statements and start adding more value. The time for rhetoric has passed. It's time for some resolve and results. In fact, if you're asking permission to join managers, then you're asking the wrong question. We shouldn't be asking permission, we should be demonstrating value." Don't ask, "What can I do?" Rather ask, "What am I doing?"
In the end, it's just as well that you learn how to change your company's tires while the car's still moving. Next, you'll be changing rocket boosters on your space shuttle. Welcome to business in the '90s.
Personnel Journal, June 1995, Vol. 74, No. 6, pp. 74-88.