Key Learnings From This Episode
- How does HR demonstrate business value to the CEO and others in the C-suite?
- By annually aligning new and innovative HR services to a company’s business objectives and strategies.
- By designing Leadership Development to address line and annual business objectives, plans and challenges, reflecting a leadership skills mix of 75% hard skills and 25% soft skills.
- Where did the 75%/25% skills mix split come from? Feedback from CEOs, Presidents, and executive leaders consistently indicated line executive development needs should focus on giving leaders a better perspective of some aspect of the business (e.g., sales, manufacturing, purchasing) or to provide exposure to business lines not previous experienced. Most executives had natural leadership abilities inherent in their DNA with a few soft skill deficiencies. Providing exposure to hard skills for the most likely upcoming position was where needs were more often expressed.
- Why don’t many CEOs see the value in HR? Most HR leaders wish for a CEO who really understands the value that HR brings to the table. Few CEOs have the background to do that because they know the least about HR compared to the other functions they direct. To achieve the status of an equal Business Partner, the HR Leader must earn that status by demonstrating HR’s ability to help the CEO and line executives achieve their annual business objectives and strategies. HR leaders must have an ongoing mindset to think like and be a business person first and an HR person second.
- What steps can an HR Leader take to demonstrate value? At the beginning of each year, the HR Leader should meet with the CEO and line executives to fully understand their business objectives, plans and challenges. For each objective, HR should ask the question, ‘what unique and innovative HR services could we implement to help them achieve these objectives?’ In doing so, the HR Leader becomes a business change agent, supporting these objectives that are critical to the company’s profitability and long term strategic growth.
- Examples of innovative HR services Jack has either seen or executed over the years.
- Most CFOs will have a financial objective to improve their earnings per share and/or an objective to increase their cash flow by a certain dollar amount. Working with Finance, HR could implement a cost control and productivity improvement workshop to help identify potential profit improvement opportunities.
- Working with Inventory and Manufacturing, HR could implement an inventory reduction workshop to identify those items that can be eliminated, reduced or replaced by lesser expensive ones.
- On the Strategic side, many companies will have an objective to acquire several businesses. HR can set up a database to analyze and compare the company’s benefits and associated costs to those of each acquisition candidate in an effort to greatly minimize outside consulting fees.
- On the Operating side where there’s an emphasis on getting to market much quicker than before, (as much as 20-25% faster), HR can work with Engineering and Marketing to implement several teams to re-engineer and streamline the design and launch cycle; and a project management workshop to help ensure that the re-engineered cycle and subsequent product development projects are achieved on time, which is extremely critical in today’s competitive market
- HR as a business change agent. The Learning & Development or Management Development function should change the focus from exclusively addressing interpersonal and basic leadership skills development to the financial and operating aspects of the business. The biggest issue is whether the Chief HR Officer (CHRO) wants to accept the difficult challenge of realigning HR’s functions, plans, staffing, budgets and priorities to directly connect the function to the company’s business objectives. If he/she doesn’t, the function will continue to remain an administrative afterthought.
- How to design successful Leadership Development Programs. Leadership Development training programs should deal with the real life annual business objectives and challenges of its line executives. To do that the hard skills should represent a much larger percentage than soft skills. Historically, in the eyes of the CEO, leadership development programs have failed for decades because they:
- Don’t deal with the executive’s actual business objectives and challenges
- Don’t deal with the technical hard skills needed for success
- Overemphasize the interpersonal and behavioral aspects of management
This approach has been borne out in two January 2016 publications – Jeff Pfeffer’s article, Getting Beyond the BS of Leadership Literature, which states that the emphasis on one or several leadership behaviors greatly oversimplifies the complexity of leadership in a company and Ron Carucci’s HBR article on a ten year study that reveals what great executives know and do. Leadership development programs should emphasize the pragmatic aspects of top management, specifically knowing your industry; knowing your company’s functional strengths and how they interact with each other; knowing how to make great decisions based on analytical data; and building trusting relationships with all your stakeholders.
- Rotational assignments to develop new skills in business functions. It is important to rotate individuals through functions, not just new hires but all levels, including executives. To make it meaningful, you have to rotate the individual into a function or position that will be consistent with his/her next most logical position, to provide the appropriate and/or desired exposure.
- Questions HR should ask. ‘Where are you taking the business?’ and ‘to support that, what training is needed for your executives?’ This will ensure HR is developing the appropriate content for its leadership development programs.
Recommended Reading and References from this Episode
- BIZCATALYST 360° - Aligning HR to a Company's Business Objectives and Strategy by Jack Bucalo
- BIZCATALYST 360° - Business Acumen for HR Leaders by Jack Bucalo
- BIZCATALYST 360° - A New Path Forward to Leadership Development Success by Jack Bucalo
- BIZCATALYST 360° - Coaching Executives from a Business Perspective by Jack Bucalo
- Getting Beyond the BS of Leadership Literature by Jeffrey Pfeffer
- Harvard Business Review Article - A 10 Year Study Reveals What Great Executives Know and Do by Ron Carucci