The CFO is responsible for monetary capital, the CTO for capital invested in machines. Thus, the CHRO should be responsible for human capital. With everything it entails. Just like his colleagues, he should ensure that the quality and availability of “human” capital remains at least the same and is prepared for future requirements. He should know how he can get appropriate personnel as needed, what innovations are pending, which training is relevant for the future, and which competition can be expected in terms of resources. And much more …
If there are analysts in the treasury department who keep an eye on the financial market, and researchers in the technical department who keep up to speed with developments at a production and product level, then there should also be employees in the human resources department who deal with the development of and the influencing factors on the current and potential workforce. This is where they should look not only inward but also outward. The aim is to ensure that staff can implement the corporate strategy in the best possible way, and that the corresponding tools and processes are available.
When Dave Ulrich enriched the world with the Business Partners Model, he surely had the notion that the three-way split into business partners, experts (he calls them centres of expertise) and administrators (he calls them shared service or operations centres) would have the following effects: In principle, the business partner is the salesman who sells the service or product internally. The centres of expertise are the researchers and developers who make sure that the offer is always up to date. The shared service centres and operations centres are the production departments that make or provide the offer. So far so good! However, every good salesman goes to trade fairs at which customers and competitors take part. All researchers go to congresses in order to gain further knowledge. Every production manager visits manufacturers of production equipment in order to learn more about new developments. All have Porter’s Five Forces in mind (for a brief summary please consult manager wiki): Suppliers, customers, existing competitors, potential competitors and their own performance. And HR is not excluded from this.
An entrepreneurial human resources department requires the same skills as the sales, production and research department: analytical networked thinking, commercial analysis, negotiating skills, innovation and creativity. That means all skills that are required in every department. Of course, special skills are also needed. Just like researchers have to know specific analysis procedures, HR managers also have to know important systemic methods.
Human resources work is so much more than mere staff recruitment, transferring salaries and organise training. In fact, it can look at the company directly and again on a meta level. If this succeeds, the company will be a true magnet for excellent employees. However, this strategic farsightedness will not occur by itself. It requires the right skills to be in the right place, and the respective interfaces to be strategically defined. How do you do that? I’ll tell you!