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Explaining Executives' Dim View of HR

Jeff Schwartz recently served as co-director of "Aligned at the Top," a study conducted by Deloitte and The Economist Intelligence Unit that looked at how people issues are seen by 531 business executives and HR leaders from companies across the globe.

June 22, 2007
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Related Topics: HR Services and Administration, The HR Profession, Strategic Planning
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Jeff Schwartz recently served as co-director of "Aligned at the Top," a study conducted by Deloitte and The Economist Intelligence Unit that looked at how people issues are seen by 531 business executives and HR leaders from companies across the globe. The study revealed, among other things, a striking gap between executives’ perceptions of business needs and HR’s focus and capabilities. He recently spoke with Workforce Management contributor Patrick J. Kiger.

Workforce Management: What do you see as the most important finding in the survey?

Jeff Schwartz: I think there are two messages that come out of it. One is that there’s an extremely clear people agenda in organizations around the world. Eighty-five percent of the survey group think that people issues are vital to their businesses today, and that number rises to 88 percent over the next three to five years. Sixty percent of senior business executives already consider these issues significant. Among the people issues, there’s clear agreement as to what is important. More than 50 percent identify leadership development, creating a high-performance culture, talent management and training as the key people issues.

WM:  What’s the other important message?

Schwartz: That there’s a real gap in perception between business executives and HR leaders. Even though they both see people issues as vital, the executives don’t see HR and HR leaders as driving the people agenda in business today. When you ask them how HR is doing, barely 4 percent describe their company’s HR as world class. Forty-six percent say HR’s capabilities are OK but need to improve, and about a third say that HR needs significant improvement. Fifty-two percent of companies don’t have a CHRO [chief human resources officer], and only 23 percent believe that HR currently plays a crucial role in strategy and operational results.

WM:  That sounds like a pretty bleak scorecard for HR.

Schwartz: There’s actually a fair amount of good news in this report for HR. While fewer than half of companies have a CHRO today, two-thirds expect to have one in place in the next three to five years, and 82 percent expect that HR will be a much more strategic function in the next three to five years. There are huge people priorities, and there’s a tremendous opportunity for HR to step into the breach and lead this agenda.

WM: What can HR leaders do to capitalize on what you see as an opportunity?

Schwartz: They need to spend more of their time focusing on the business and upon the enterprise side of their portfolio, and less time focusing on basic operational efficiency and what I call the "dial tone" of HR. Think about this from the perspective of other functional leaders. The chief information officer is expected to deliver basic services such as network infrastructure, but the organization assumes they will be delivered. The CIO’s real challenge is to add value to the organization—by finding new ways, for example, to use information technology to improve customer intimacy or speed innovation.

It’s the same with HR leaders. They have to deliver the core functions, but they also have to become obsessed with people issues and how they can help the business. It’s a shift in emphasis.

WM: You surveyed companies across the globe. Did you notice any regional variation in their thinking about people issues?

Schwartz: Let’s talk about the similarities first. We found that the view of most executives and HR leaders is that people management will become more of a strategic issue over time. We also found that they think that the most valuable source of talent is developing people from within the organization, and that that’s going to be a dominant issue. All over the world, their views are pretty similar on those things.

One area where we found a difference was in the perception of HR. The function is rated more strongly in North America than it is in Asia, where a lot of it is outsourced, or in Europe. Our inference is that in HR, transformation is being driven by North America, and that they’re probably the farthest along on the journey. That’s why they’re doing better on the scorecard.

Workforce Management, June 11, 2007, p. 6 -- Subscribe Now!

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