BUSINESS TODAY DEMANDS A
COMPREHENSIVE TALENT STRATEGY.
CAN HR DELIVER?
By Emilie Petrone and Gabriella D. Kilby
Human resources
departments are in
a state of transition.
Even as companies
increasingly outsource
administrative HR tasks,
these departments are
being asked to identify
and develop nextgeneration leaders and
manage globalized
talent pools. And yet it is
clear that not every HR
executive has embraced
this larger strategic role.
T
he HR function is in a state of transition caused by the increasing pressure to identify and develop next-generation leaders,
the growing globalization of businesses and talent pools, and
the CEO’s requirement that HR be more strategic and relevant to the
business as a whole. As HR seeks to meet these demands, others have
questioned its effectiveness.
In a talent management study released in 2008 by McKinsey &
Company, 58 percent of the line managers interviewed agreed with
the statement that “HR lacks capabilities to develop talent strategies
aligned with business objectives.” Twenty-five percent of HR professionals
surveyed concurred.
Another question addressed whether HR professionals feel they are
empowered or even equipped to be strategic. Fifty-one percent of HR
professionals agreed with the statement, “HR is an administrative
department, not a strategic business partner,” startlingly close to the
60 percent of line managers who shared that opinion.
In fairness, we acknowledge that not every organization requires or is
ready for a strategic HR function. Nonetheless, there is evidence that
as the world grows more complex, HR professionals increasingly will be
asked to take on strategic responsibilities.
For example, CEOs feel a keen need for HR strategists. In the
PricewaterhouseCoopers 12th Annual Global CEO Survey, released
in 2009, 97 percent of CEOs said they believe that access to and retention of key talent is critical or important for sustaining growth over
the long term. These talent issues ranked first in the list of critical
drivers of long-term success, followed in order by ability to adapt to
change, strength of brand and reputation, and high-quality customer
service.
Clearly, the HR function has a pivotal role to play in ensuring that the
top drivers of long-term business success are in place, and executives in the profession need to focus on developing the necessary
expertise within their organizations because it will be needed if not
now, then in the future.
The Path to HR Leadership
To assess how well HR is prepared to address major business
issues, it may be instructive to look at the career paths of senior
HR professionals. In a recent Korn/Ferry study of Fortune 1000 chief
human resources officers (CHROs), 81 percent of those holding
this title had been divisional CHROs or senior HR generalists prior
to their appointment. More than 50 percent of these CHROs have
been promoted into their jobs. Of those who were hired from outside
the company, 78 percent were either existing CHROs or senior HR
generalists.
On reflection, it is not surprising that generalists are preferred over
specialists. Because of the diversity of assignments and experiences,
generalists tend to have a broader view of the organization and of
the business. Their cross-functional understanding and relationships
are likely to be stronger than those of specialists, and they more
often have exposure to change management activities and global
business strategy.
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Figure 1:
BEST PRACTICES DRIVING STRATEGIC HR
influence
Influence effectiveness
Ethical influence tactics
Organizational power sources
Personal power sources
access
point-of-view
rganizational alignment
O
“ Seat at the table”
Best-in-class strategic
HR capability
usiness acumen
B
rganizational savvy
O
Functional depth
The practical value of these attributes is confirmed by the HR best
practices model developed by Korn/Ferry’s Leadership and Talent
Consulting group. Our strategic HR model calls for three primary
intersecting capabilities: influence, access and point of view (see
Figure 1).
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“I just hope HR executives
will pound the table to get a
voice in their organizations.
I just think riding along,
being a bureaucrat, playing
less than a critical role in
the organization shouldn’t
be acceptable to anybody
worth their salt.”
– Jack Welch
former CEO of GE in an
interview with the Society
for Human Resources
Management publication,
HR Magazine
Strategic HR executives must be able to influence the thinking and
actions of others through proven capability and relevance to the
business agenda as well as ethical influence tactics (Influence).
The organization’s structure must ensure a pathway (Access) through
which HR executives can communicate with decision makers. Most
importantly, strategic HR professionals must possess the business
acumen, strategic thinking, organizational savvy and functional depth
to have a convincing opinion or voice (Point of View).
Our model shows that all three capabilities must be present for HR
to realize its full potential. For example, the CHRO with access and
influence but who lacks strategic skills and business acumen (point
of view) will not have true business impact. Likewise, an executive
who has solid opinions and influence without access will find that his
or her ideas rarely reach decision makers. And, a CHRO with access
and a point of view but who lacks the capability to influence will not
be fully effective. So, strategic HR depends on the presence of all
three capabilities.
Achieving a “best practices” strategic HR function is challenging.
Despite the tremendous growth in outsourcing of routine
administrative HR tasks, CHROs retain overall responsibility for
executing the transactional side of the function, whether retained
internally or managed through an external partner. Doing this well
is part of the “business of HR” and is necessary for a successful
organization. However, the trend to outsource these tasks or to
consolidate them into a shared services organization should also
free the HR executive to spend more time on strategy.
The Two HR Executive Profiles
To further assess the executive HR landscape, we analyzed
Korn/Ferry’s proprietary database of executive profiles and found
that the top 20 percent of HR executives fit into one of two profiles:
operational or strategic. (The existence of two distinct profiles in
our opinion reflects the evolving nature of the HR function itself as
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The Korn/Ferry Institute
organizations re-invent their business models to meet new economic
and competitive realities.)
Operational HR executives have strong social and communication
skills, tend to emphasize execution and short-term goals, and view
themselves as implementers of organizational initiatives, rather than
members of the management team.
Figure 2:
HR LEADERSHIP VERSUS OTHER C-SUITE EXECUTIVES
Leadership Style:
Thinking Style:
An individual’s decision-making style when influencing and motivating others or when engaging with an audience
An individual’s decision-making style when focused on the task to be addressed rather than on his/her behavior
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6
5
5
4
4
3
3
2
2
1
1
0
0
Task
Focused
Social
Intellectual Participative
Strategic HR
Action
Focused
Flexible
Operational HR
Complex
Creative
C-Suite Executive
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Strategic HR executives, while also emphasizing social and
interpersonal skills, use more collaborative skills, are more flexible
in their operational styles, display higher tolerance for ambiguity
and uncertainty, and view themselves as partners in the overall
management of the organization and of addressing long-term issues.
Particularly interesting is the striking resemblance our data
analysis uncovered between the leadership styles of strategic HR
professionals and C-suite executives in general (see Figure 2).
This leads us to propose that senior HR professionals desiring to
play a greater role within their organizations or to groom the next
generation of HR leaders should focus on developing the core
strategic leadership competencies necessary for the C-suite. Use of
the strategic profile to guide assessment, selection and development
will be of considerable help in achieving this.
Developing Strategic HR Leaders
Strategic capability includes a number of competencies: business
acumen; strategic agility; problem solving; perspective; and the ability
to deal with ambiguity, to learn “on the fly,” to manage innovation and
creativity, and to make quality decisions on complex issues that have
long-term consequences.
Business acumen rates among the most important of these
competencies. In our conversations with more than two dozen
CHROs, CEOs and other senior corporate leaders in the United
States and Canada, a clear understanding of the organization’s
business and the ability to speak the language of business were
unanimously endorsed.
Behaviorally, this is observed as an understanding of the environment
in which the organization does business, a grasp of the company’s
standing relative to its competitors, an awareness of the strategic
and operational challenges facing the business, and an appreciation
for the concerns of functional leaders, managers and employees.
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Drew Mackay, vice president of HR for the engineering consulting
firm Stantec, places business acumen high among his criteria for
promoting HR staff. “I have people who are really super as regional
people,” he says. “But, I’ll never put them in a bigger role if I don’t
see the thought process, the problem solving and the engagement
that tells me they understand the business.”
Building on business acumen are the other competencies discussed
above, which enable strategic leaders to see what must be done
now to position the business for future success and how the
human capital strategy will support that. They can leverage their
understanding of the business and HR practices to conceive of
solutions that have practical relevance in the current context and
deal creatively with longer-term obstacles.
Because of the balance HR must walk between its transactional
responsibilities and its strategic capabilities, HR would be wise to
remind others of its business acumen by being conversant in relevant
metrics. “The people around the executive table have significant
accountabilities in terms of business results,” says Lilydale’s Pelletier.
“HR needs to talk about metrics, as opposed to social experiments.”
The ability to speak to ROI as other functions do will translate into
the ability to influence, another essential ingredient for a successful
strategic HR function. One easy question to ask when assessing
strategic HR capability is whether the HR executive in question
understands how to read and analyze a balance sheet.
Mastering the Art of Influence
More than 20 years of research by Lore International Institute, a
Korn/Ferry company and a leadership development consultancy,
finds that true leaders convince followers to act by inspiring,
coaching and setting an example. They do not get their way by
exerting direct control over others. Power – organizational and
personal – is the foundation for influence.
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In establishing their power base, strategic HR executives must
guard their reputations and ensure, by the actions they take and the
positions they support, that their role is not viewed solely as that
of a gatekeeper or a compliance monitor. Otherwise, they will be
unable to persuade line managers that they are capable of delivering
anything of strategic value, including a talent management strategy.
HR leaders must collect relevant, useful information about talent
strategies and disseminate, sell and implement it among executive
teams.
HR executives also need to form broad networks, especially
internally. Strategic HR executives must be sufficiently connected
within the organization to have a deep reach and understanding of
the business. This circles back to the CHRO Fortune 1000 analysis,
which showed that HR generalists, who often have such broad
networks, are favored for the C-suite HR role. This is reflected in the
social and participative leadership style exhibited by best-in-class
HR leaders. These executives must be able to build bridges across
functions, understand the motives and drivers of senior-level decision
making, and help translate that thinking to their key executives.
A highly flexible thinking style, which is more pronounced in the
best-in-class HR leader profile, indicates that highly effective HR
executives are strategists who can adapt their methods to deal with
changing organizational needs and differing levels of sophistication,
understanding and support across the business.
In terms of personal power, HR leaders need to be perceived
as knowledgeable about talent, broadly, and business strategy.
They must be equipped to help coach and align the CEO and the
executive team.
Deepening the Bench
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A strategic HR executive’s ability to attract, grow and retain the
organization’s HR talent is critical to maintaining and growing the
function. In practice, there appear to be different paths to deepening
the HR bench.
Many of our interviewees offered suggestions for helping young HR
professionals gain the necessary business insight. “I would absolutely
send someone out for 18 months in a line function,” explains Dean
Mackey, vice president of HR and administration for Parkland
Industries Ltd., Canada’s largest independent operator of fuel and
convenience stores.
John Pothin, a senior vice president of HR at Hasbro, agrees. “The
development cycle in HR should include more experience outside HR
and exposure to other businesses and functions.”
Assessment can help to uncover staff who possess the skills, at least
in their basic forms, that a strategic HR leader needs. High-potential
employees have specific capabilities. They succeed in first-time
situations because they have the mental capacity, people skills,
ability to cope with change and performance level to learn and deliver
results quickly, all of which can be identified through assessment.
In terms of developing HR staff, what appears to be most important
from our experience is placing promising candidates in complex
scenarios involving multiple stakeholders. Such experiences will
teach them about the business, will stretch their problem-solving and
critical thinking abilities, and will hone their persuasion skills.
Developing the strategic HR leaders of tomorrow depends,
of course, on attracting business-savvy high potentials to the
profession. Part of the answer, in our opinion, lies in building the HR
function into one that influences business results and is high profile,
thus requiring HR leaders to use their entire skill set.
Conclusion
HR executives who desire to create the organizational capability and
talent strategies for the post-recession world need to be competent
tacticians who also can think and act strategically. This means
understanding the fundamental administrative side of HR and being
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able to oversee the execution of such tasks while at the same time
being a well-developed business person who can frame the function
within strategic goals.
CHROs and other senior leaders must thoughtfully develop HR
managers who behave and think more like their colleagues with
profit-and-loss responsibilities. And, they need to re-think their
approach to workforce analytics, with an eye towards linking
what they do to the fundamental drivers of the business, thus
demonstrating their ability to help the organization achieve its long-term goals.
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Acknowledgements
Korn/Ferry would like to thank the following CEOs and HR leaders for
their participation in this research:
Robert Armstrong
Alberta Health Services
Matthew Handford
Forzani Group Ltd.
Peter Arnold
EPCOR
Bob Kolida
Hudson’s Bay Company
Steven Berger
Viterra
Jennifer Koury
Enerplus
Donna Boles
Becton, Dickinson & Company
Dean Mackey
Parkland Industries Ltd.
Annette Butt
FortisAlberta
Drew Mackay
Stantec
Benito Cachinero- Sánchez
ADP
Kevin McManus
ConvaTec USA
Jim Donihee
Pengrowth Corporation
Dale Morrison
McCain Foods Limited
John Duncan
Canada Post
Ed Oke
Trinidad Drilling
Laura Famularo
Johnson & Johnson
Jacques Pelletier
Lilydale Inc.
Peter Fasolo
KKR
Kevin Pennington
Rogers Communications
David Fulton
CCS Corporation
John Pothin
Hasbro
Terry Gill
ARC Resources Ltd.
Mike Williams
TransAlta
Jim Grossett
Agrium
Janice Wismer
McCain Foods Limited
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Emilie Petrone is a Senior Client Partner in Korn/Ferry’s Human
Resources Center of Expertise, based in Princeton, N.J.
Gabriella D. Kilby is a Client Partner in Korn/Ferry’s Leadership and
Talent Consulting group, based in Toronto.
Korn/Ferry wishes to acknowledge the significant contributions made
by Terry Bacon, Ken Brousseau, Christine Fuchs, Dee Gaeddert and
Kathy Woods in the preparation and development of this whitepaper.
About The Korn/Ferry Institute
The Korn/Ferry Institute was founded to serve as a premier global
voice on a range of talent management and leadership issues.
The Institute commissions and publishes groundbreaking research
utilizing Korn/Ferry’s unparalleled expertise and preeminent
behavioral research library. It also serves as an exclusive
destination for executives to convene and hone their leadership
skills. The Institute is dedicated to improving the state of global
human capital for organizations of all sizes around the world.
About Korn/Ferry International
Korn/Ferry International, with a presence throughout the Americas,
Asia Pacific, Europe, the Middle East and Africa, is a premier global
provider of talent management solutions celebrating 40 years in
business. Based in Los Angeles, the firm delivers an array of solutions
that help clients to attract, develop, retain and sustain their talent.
Visit www.kornferry.com for more information on the Korn/Ferry
International family of companies, and www.kornferryinstitute.com for
thought leadership, intellectual property and research.
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© Copyright 2010 The Korn/Ferry Institute