What do HR professionals need to really be HR Business Partners 2.0?

It's no secret that many HR professionals are unhappy how the are perceived in their organisations. The following statement can be formulated after some discussions and deep interviews with HR professionals:

Human Resource and Finance functions have a lot common. Technology makes them even closer. They have similar objectives, but somehow finance professional are considered to add more value to business. If HR professionals could function in the same mode as people in finance, not only they would perceived to add more value, they will be adding more value.

Now a bit more about this.

Finance and HR functions: what do the have in common?

First, both of them are supporting functions.

Second, organisational structures are similar.

Third, they manage very important capital: HR manages Human Capital and Finance manages money.

Both functions, being supporting, are built into the very fabric of business and are implemented on three levels of organisation: strategic, tactical and operational.

Why HR becomes more important?

Nowadays, in most organisations, most value is added by the employees who Peter Drucker called "knowledge workers". Many banks are restructuring themselves to be more like IT companies.

HR professionals understand it and try to divide most of their services. But they have difficulties with HRIS, CoE, ESS, MSS when they try to establish their Shared Service Centers or SSC.

HR Business Partner 2.0

In some market many large companies try to make corporate universities such SSC and require them to offer their services for external organisations.

The problem is that it is relatively easy to measure profitability of such services, but quite difficult to measure internal efficiency.

Why should HR prove their value to business?

Finance professionals have it easy. All assets in business have monetary value and financial models can be used to develop plans and then to compare them with what happened in reality.

More than 100 years ago DuPont employees developed their model to understand the factors that impact profitability.

Since then all finance professionals know how to align strategic, tactical and operative levels of financial management. HR professionals just can't do it.

There are two reasons for it.

The first reason is what one of the participants called "scope of human knowledge of People professionals". HR professionals tend to be experts in very limited areas of recruitment, evaluation, engagement, L&D etc., but have limited business acumen.

There is a limit in individual knowledge and skills of HR professionals.

The second reason are gaps between different HR functions. When we present our system to HR professionals, usually more than 5 people are present. The is 20 people. We can hardly imagine CFO who would invite 19 reports to the meeting with the potential provider.

The reason for this is that unlike Finance, in HR all functions are not connected, or they basically have a vertical structure and report to HRD.

This gap doesn't allow to use metrics to link activities to outputs as in all other functions in business: IT, marketing or logistics.

HR spend a lot of time on recruiting, selection, learning and development, but they can't measure their own performance. The links in "Performance - Assessment - Learning" are broken.

What can be done?

Laszlo Bock who has been the VP of People in Google recently, correctly pointed out to the solution that can solve the problem.

We need to measure how learning impact behaviours to close the gap between assessment, recruitment, learning and performance.

It's that simple. This would help to align strategy from top level to operational levels via strategic roles portfolio, assessments would be linked to learning and we can also measure how knowledge gained impacts business results via regression coefficients.

This would allow to clearly show the value HR brings to the table as "figures would speak for themselves". And "HR Value Added" Dave Ulrich promotes would be measured as easily as EBITDA.

For HR professionals that would no need to "earn" BP credentials as everybody would understand that HR is the most valuable value creator.

That would mean that Dave Ulrich's famous quote - "HR is not about HR but the business" - become reality.

Human Capital Leverage

Самое большое профессиональное открытие этого года, это, конечно, открытие Human Capital Leverage. В чем суть «рычага человеческого капитала»? Формула его проста: Human Capital Leverage = 1п. / + 25% / +

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