HR Execs on the Hot Seat More Than Ever Before

June 25, 2007
Be careful what you wish for, HR. More than ever, human resource professionals are getting that long-desired “seat at the table,” with company execs seeking HR’s help in setting talent-related strategy.

But with great power comes great responsibility--an potentially un welcome publicity, says Fred Foulkes, professor of organizational behaviour at Boston University. “More and more CEOs see the significance of HR being a competitive weapon,” he says. “As a result of that, expectations are really up.”

One sign of the times is the presence of HR professionals on boards of directors. Another is the public scrutiny this year of Dennis Donovan, Home Depot’s former HR top dog. After the home improvement retailer’s embattled CEO, Robert Nardelli, quit in January, Donovan left, entitled to a multimillion-dollar severance package thanks to a clause in his employment agreement.

Greater expectations for HR leaders is among the key issues facing the profession these days. Others include preparing for major demographic shifts in the workforce, making sense of new technology products designed to help manage talent, and wrestling with outsourcing options. At the same time, HR leaders are asked to handle a growing mound of litigation and compliance challenges.

Mastery over executive pay matters, equity grants and other compensation issues has become more important for senior HR managers, says Greg Hessel, leader of the HR Center of Expertise at executive search firm Korn/Ferry International. Hessel is seeing heightened demand for HR leaders who earn cash packages worth more than $200,000 annually. Korn/Ferry expects to place more than 300 of those high-level HR execs worldwide this year, up from about 250 in 2005. Though the market is tight for senior HR leaders, the candidates at that echelon tend to be competent, strategic players, Hessel says. “They are that business partner.”

The profession has sought to become more business-focused and win the ear of CEOs in part through greater use of metrics. IBM human resources chief Randy MacDonald, for example, is a proponent of gauging the workforce. “As a shareholder,” MacDonald told Workforce Management this year, “I have an expectation that if I’m going to make an investment in people, I ought to be able to measure that level of investment.”

Others, though, might be called metrics skeptics. Scott Mannis, director of organization development and talent management at apparel firm Kellwood, says that at any given time he concentrates on just a couple basic figures that are most relevant to his 20,000-person organization, such as turnover or the number of successors in place for key jobs. Mannis says too many professionals in the field get caught up trying to quantify intangibles in the form of a return on investment. “It can go too far,” he says.

In any event, HR still has a ways to go when it comes to business clout, a new study suggests. The report, by Deloitte and The Economist Intelligence Unit, found that just 23 percent of executives polled (a sample including HR and non-HR leaders) believe that HR plays a crucial role in strategy formulation and operational results.

The Society for Human Resource Management sees itself as leading the charge toward greater business savvy and respect. Just as business is becoming more global, for example, so is SHRM. During the opening general session Sunday, SHRM president Sue Meisinger highlighted the organization’s efforts abroad. At the end of last month, SHRM officially opened up shop in China, she said.

“We’re very enthusiastic about SHRM’s international agenda,” Meisinger said.

SHRM is doing the right thing to improve the profession’s image and value, Foulkes says. A former SHRM board member, Foulkes currently serves on the SHRM Foundation board, which distributes money for HR-related research. He wishes SHRM would come up with more programs to help high-level HR execs improve their skills and knowledge.

But Foulkes says the CEO Exchange series, a PBS program sponsored by SHRM that has featured talks with General Electric Co. CEO Jeffrey Immelt and other CEOs, is a step in the right direction. Overall, Foulkes says, Meisinger and her team not only tout the importance of a strategic mind-set, but provide the research and other tools to help up-and-coming HR leaders be sharp business partners. “For the masses,” he says, “it’s just a great resource.”

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Ed Frauenheim