There are some important questions for leaders of small and mid-size businesses raised in the recent article People Before Strategy: A New Role for the CHRO, by Ram Charan, et al., in the July-August 2015 edition of Harvard Business Review.
The essence of the article tackles an emerging trend in larger companies to recognize the essential dual purpose of Human Resource (HR) departments to both create, file, track employee data and training activities PLUS be the inside expert on how well the company is unlocking the potential of its people.
This makes logical sense and most HR Managers would say they are empowered to do both, but what the big companies are finding is that to really get the unlocking people stuff right, they have to elevate the role of the HR Manger in the company. This requires a paradigm shift. Charan et al. label it the G3, which is a subgroup of the executive team: CEO, CFO & CHRO. The primary work being to synergize financial drill downs WITH staffing resource and leadership growth drill downs.
For example, a company looking to expand globally would not simply assess the financial capital pressures of such an expansion, but also rely on the CHRO to plan for human capital pressures, e.g., what how deep is our bench of emerging leaders to handle this expansion, if we bring in talent from outside, what current leadership gaps do we really need to fill and what do we want to position these new leaders for in 2 years down the road.
Where I see this coming to play in small and mid-size companies is not in fully empowering HR Managers to truly nurture and bring along the emerging leaders in the company -- so they can be trusted with leadership stretch assignments and prove their mettle. Rather, any expansion of markets or products is usually given to the tried and true 1st line leaders, who end up caught in the continuous trap of doing versus coaching and thus not able to train up the leadership bench.
Secondly, the HR Manager is not freed to be a part of tracking current culture issues as well as in putting together culture advancement strategies, including addressing weak behavioral linkages between essential departments.
Thirdly, the HR Manager is not included often enough in questions of compensation, in which a one size fits all approach is often used rather than aligning compensation to drive key company or department wide goals based on an understanding of what uniquely motivates different staffers.
The article points out that such an evolution of the HR role in a company takes 3 years of concerted effort. In small and mid-size companies, I have seen the evolution in small and mid-size companies in half that time once the CEO understands the value of the paradigm shift and unleashes HR to unbind its human capital resources.
"Human potential unbound...the hard work worth doing."