The Key to Strategic HR: You Must Be a Strong, Capable Business Partner

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Jun 18, 2015
This article is part of a series called Classic TLNT.

Editor’s Note: This is the 10th of 12 essays from the new book, The Rise of HR; Wisdom From 73 Thoughts Leaders. It’s compiled by Dave Ulrich, Bill Schiemann and Libby Sartain, and sponsored by the HR Certification Institute.

By Richard L. Antoine

In the summer of 2014, Ram Charan published an article in the Harvard Business Review titled It’s Time to Split HR.

Even though Ram is a respected colleague and a friend, I wrote a rebuttal (as did several of our other colleagues) taking exception to his proposed solution to split HR. However, I very much concurred with Ram on his basic premise — more HR leaders need to be better business partners.

Whether they are at for-profit companies, academic institutions or nonprofit organizations, business leaders need HR leaders who are functionally knowledgeable and understand the business. HR leaders will be viewed as strategic partners who can help solve real problems if they:

  • Use the business or entity strategy to drive HR activities.
  • Understand the business and financial model.
  • Know what drives success for the business. Does business success depend on innovation, capital utilization, customer connectivity, service excellence?
  • Understand the business metrics (such as profit, margin, ROI, free cash flow productivity) and what drives them. For example, if your company uses Total Shareholder Return (TSR) as a key performance metric, the HR leader should know the specific metrics that drive TSR.
  • Determine the skills and capabilities that are needed to deliver the business strategies.
  • Identify the top talent and match them to business-critical roles.
  • Determine the organizational risks that could jeopardize the company’s business success.
  • Design organizations that deliver outstanding business results.

1. Forging credibility with line leaders

HR leaders who consistently demonstrate these behaviors will be sought for their expertise, included in critical discussions, and used as a sounding board for difficult business decisions. In other words, they will be valued business partners.

RiseofHR Front CoverIf the behaviors above demonstrate effective business focus, then what are the characteristics that HR leaders must possess to be seen as valued business partners instead of HR caretakers?

First is credibility with line leaders. The leaders who run the business want HR leaders who understand the business, who know the pressures they face to deliver results, and who provide practical organizational solutions.

The best way to obtain this credibility is through “line experience.” Some managers work their way up through various line positions and then transfer to HR. Or HR professionals are moved into a line role for a two- or three-year assignment. I spent 25 years in Proctor & Gamble’s supply chain before becoming the global HR officer.

“Walking in their shoes” gives an HR professional maximum credibility.

If line experience or a line assignment is not possible, then the HR professional needs to become a student of the business. Learn everything you can about the business strategy, financial model, and business terminology (including the items listed at the beginning of this article).

The great chief human resources officers (CHROs) I know are all great students and observers of the businesses in their companies. They listen, seek understanding, and learn from the best line leaders. At Procter & Gamble we developed a course called MBA (Managing Business Accounts), where top professionals from finance, strategy, supply chain, business services, and other functions taught our HR professionals about the business so they could be good business partners.

2. Coming up with business solutions

Second, HR leaders need to offer solutions to business problems. Business leaders don’t want to hear what they can’t do. (One caveat: The planned solution or the business leader’s behaviors cannot violate the ethics of the company or the laws of the country.) Business leaders want thoughtful, sound, and creative solutions to problems.

If HR leaders combine their knowledge of the business with their understanding of the human capital that drives the business, new approaches and solutions can be presented.

3. Providing counsel and advice

Third, business leaders need and value HR partners who can provide advice and counsel.

Everyone needs a sounding board — someone who can be trusted to provide impartial, confidential advice. As business leaders rise higher in the organization, they have a greater need for a counselor. And who is better qualified than the HR leader, a person who understands the pressures and challenges of the business leader, a neutral observer who is trained as a coach?

Regarding the last point (being a neutral observer), I believe it is important that the HR leader is not in the succession plan for the business. If the HR leader is a top succession candidate, he or she is no longer a neutral observer.

How can the business leader rely on the advice and counsel of a person who may have career goals to replace them? This conflict of interest is why I am not a fan of rotating line leaders through the CHRO role. It deprives the CEO of a valued coach and advisor who has no agenda other than what’s best for the company.

4. You must also be a change agent

Finally, valued HR business partners need to be change agents.

In the physical world of energy, there is no such thing as stability. The same is true in business; things either get better or worse. Of course, business leaders want better results, which usually result from change.

Changing the strategy, changing the business model, changing the culture, and introducing innovation are all methods for changing the trajectory of the business. All require making significant changes to the talent or organizational design in some or all parts of the organization, and the HR leader is the one best qualified to help the business leader with the change.

It is most useful if the HR leader has a model or framework for change. My favorite is the Kotter model, but there are several that work equally well.

A need for strong, capable HR leaders

One of the many challenges I faced as the CHRO of a major company was rotating the HR business leaders (VPs of HR for multi billion-dollar businesses). If the VP of HR exhibited the four characteristics enumerated previously, I had a very difficult time trying to convince the business leader of the need for a different HR partner.

That’s one way of measuring the importance of a HR leader as business partner — the business leader is reluctant to give up their HR leader.

Business leaders, from CEOs to division heads, need strong, smart, and capable HR leaders that are true business partners. If that HR leader has credibility, provides solutions, assists with neutral counsel, and leads change, then

Compiled by Dave Ulrich, Bill Schiemann and Libby Sartain, and sponsored by the HR Certification Institute, The Rise of HR: Wisdom from 73 Thought Leaders is an anthology of essays addressing the critical issues facing business and talent professionals today. The full eBook can be downloaded @ Reprinted with permission of HRCI.

This article is part of a series called Classic TLNT.