Transformation of HR’s Role in Business

Alla Gridasova

A week ago I happened to see a good friend of mine, an ex-HR colleague whom I haven’t seen for about 10 years. Last time we met in the late ’90s when the HR community was actively discussing a new HR mandate by HR guru Dave Ulrich.

A lot of positive emotions, news and recollections came up during a cup of coffee. Of course we started to talk about the HR profession and where HR’s function is in its journey from administration and transactions toward a strategic HR business partner role. Have we succeeded in repositioning HR’s function? Is it a common practice today to have a business-led people-management strategy? Have companies invested enough in developing HR business-partner talent?

Firstly, we agreed that expectations about HR function dramatically vary from company to company. Recently, one of my clients, a successful Russian general manager, praised the work of his HR department. “They are real professionals,” he said. “We have laid off about 700 people without any court cases and other problems. The documents are in ideal order. The costs were significantly cut.” Another head of a Russian company has given me an absolutely opposite opinion, saying, “I’ve interviewed dozens of candidates, however I have not seen a person who could fit with an HR business-partner role.” They are totally occupied with the HR systems, procedures, papers. However, they could hardly explain how this HR staff is linked to business success in the market place.”

So what has changed? Certainly, the Russian HR environment has made a great technological step and many Russian HR specialists can give lectures on the HR procedures and technologies. Most HR departments have introduced key HR processes such as performance management, salary review and succession planning. Sometimes we see state-of-the-art job specifications, performance appraisal forms, etc. All these speak to the fact that 10 years were not spent in vain. More importantly today we observe exceptional HR talent in the Russian market. However there are not many of them yet.

Different studies on HR’s role in the corporate hierarchy demonstrate its low status. This is not only among employees who often treat HR people just as discipline-oriented drones, not as representatives of their interests at management level. Management team members often also give a “low rate” to the HR function and don’t see a real link between formal HR procedures and business goals.

Technological jumps haven’t ensured transformation of Russian HR’s majority from administrators to an internal advisers role. However, Russian businessmen in theory support the international discussion that attracting and developing talent becomes the part of business strategies. But in real life, theory is not translated into actions. And here arises the eternal Russian questions: who is to blame? Who does it benefit? What should we do?

Traditionally, there is no one to blame. And this is not guilt but a problem of contemporary Russian business — HR is not positioned as a strategically important function. Here we are not talking about declarations on the corporate web sites and annual reports that “people are the greatest value of the company.” Unfortunately many heads of businesses are not yet ready to take people management strategy seriously.

On the other hand, heads of businesses do not see HR managers as people they could rely on and treat as equal partners, who think and talk business and contribute to business success. It’s not only necessary to have knowledge and technical skills in HR, but to have a business-like mindset to offer HR solutions enabling business to fulfill its corporate agenda. HR managers often have a lack of understanding of strategic organizational development, internal consultancy skills and corporate management.

Does anyone benefit from this? Of course not, but it seems that the majority is satisfied with such a situation.

What should we do?

Heads of businesses should realize the strategic significance of HR for the company’s success and should give it more appropriate positioning within the company. They should involve HR people in the corporate business processes and projects associated with strategy implementation, starting from budgeting, business goals setting and planning. Of course, all the above activities could be performed with the full readiness of HR specialists to change themselves. We have some good examples in the market when HR professionals came from different functions such as sales, marketing, and R&D with better knowledge of business. Of course, such people should have key competences relevant to HR, but technical knowledge can be picked up on the go while business mentality and approach are not that easy to develop. Today the winners are those who have managed to position HR as a key strategic function and are investing in developing strategic HR capabilities.