The Case For Leadership Driven HR

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Mar 3, 2017

The time has come for a human resources revolution. Traditional HR is broken and needs to be left in the dust. The people and HR practices that got your company here, will not get your company there — to that high-growth, forward-thinking, revenue-generating powerhouse.

It’s a bold statement, but acting on it is crucial to your organization’s success. Leadership, and the structure of its design, is the most critical function in business, today. It’s what drives performance and growth, especially in progressive companies and industries like technology — and HR needs to be a part of it.

As leaders, we know that any initiative, especially talent acquisition and retention, succeeds or fails with us. Therefore, partnership and buy-in from the leadership team to execute these initiatives must occur for any programs to work. Think about performance reviews, rewards, recognition, collaboration, hiring, firing and training. None of these systems run without direct partnership between leaders and managers. And it’s HR that is leading the charge on these initiatives.

Did you know the top challenge for 80% of tech company CEOs is finding and retaining people with the right skillsets to deliver future growth?

“CEOs worldwide see human capital as a top challenge, and they rank HR as the eighth or ninth most important function in a company,” according to an article in the Harvard Business Review. The article goes on to question why the chief human resource officer (CHRO) is not as integral to the CEO as the CFO — and it’s this kind of thinking that leads to traditional HR being so flawed. Let’s look at why.

Why is traditional HR so broken?

Is traditional HR really all that bad? Let’s look at the broader picture. For decades, HR has been tucked neatly between sales and accounting as merely another department that functions within its own silo. However, that shouldn’t be the case. HR cannot be a siloed entity. Unlike other functions, HR touches every aspect of the company and everyone in it.

The examples are everywhere, and they’re driving the culture and success of the company. Yet, they have become so standard to us that we don’t even realize what is really happening. Look at the current rewards and recognition program at your organization. Does it drive people to incite positive change for the mission of the organization? Do people see how what they do each day impacts the customer, and are they compensated accordingly? Or are the compensation programs – grounded in policies created in rigid, antiquated corporate times – failing to evolve?

Stuck in the past?

In many companies, HR is stuck in a gear it’s always been, using archaic systems that aren’t tied to what today’s employees desire. HR in practice is simply a recruiting, onboarding, training, offboarding and policy-wielding function.

In many organizations, your typical HR department is more concerned with executing these tasks rather than creating and implementing solutions for employees and the business. This leads to skyrocketing turnover, which causes most organizations’ results to follow the growth path of the GDP. So, in a lot of cases, we’re asking this role of “Chief Human Resources Officer” to deliver the wrong things to the business.

Leadership development as a requirement won’t wait any longer. In knowledge-driven, fast-growth organizations, HR is critical to success in business goals. HR can drive performance, productivity and employee happiness. So why doesn’t it? According to the Society of Human Resource Management (SHRM) the role of the CHRO includes: strategic advisor, counselor, board liaison, talent architect, HR function leader, workforce sensor and firm representative. Notice “leadership” is missing?

Millennials are forcing change

As technology evolves and the next generation enters the workforce, leaders need to wake up, see critical workforce needs and adapt to them. And we need to do it now. Why? For one, millennials. Millennials are now the largest generation in the U.S. workforce. By 2020, nearly half (or 46 percent) of all U.S. workers will be millennials. And they are asking for more from companies.

We’ve seen this data coming for years, yet HR organizations haven’t taken a serious look at how their departments will have to evolve to meet the needs of this changing workforce. Not every generation is the same, and we’ve seen many studies articulating the values of millennials and their expectations of the workforce. So, what do they want in the workplace? According to Forbes:

  • 64% of millennials want to make the world a better place;
  • 74% want flexible work schedules;
  • 88% prefer a collaborative work-culture rather than a competitive one;
  • 79% want their boss to serve more as a coach or mentor.

Fundamental values

Yet, the workplace values that millennials want are fundamental to all of us. Unhappiness with leadership and management and lack of opportunities and training are the top reasons your employees are likely to leave. They want what Daniel Pink outlined in his book, Drive: purpose, autonomy and mastery. When teams have purpose, autonomy and mastery they feel they are directing their own lives, learning and creating new things and improving the world. Now, doesn’t THAT sound like something to strive for in any organization?

The HR organizations of the future need to take this on as their number one priority. Without focus on the purpose and values, executive teams will not be able to attract and retain millennial talent. Millennials are only pushing the issues others generations wanted, but didn’t have the guts to demand.

Leadership driven HR

There is a huge disparity between well run and poorly run HR teams. If people really are the priority in any organization, you must invest in them properly. Put money behind your development programs, and you’ll benefit by — wait for it — leaders!

In this report from Bersin by Deloitte, leadership-driven companies spend almost twice as much per employee on HR than their compliance-focused counterparts ($4,434 v. $2,112 per employee). And guess what their return looks like? The investment in employees creates much better business outcomes. For example, voluntary turnover rates are 30% lower. When organizations meet their people’s core needs, their people want to give back to the organization.

Leadership is your vehicle for successful people programs, and your people are your vehicle for a successful company. So, look at where leadership is represented and how it’s represented. It’s time to elevate HR teams and start thinking about them as a vital, strategic partner, not just a people task machine.

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