By Nancy Gore and Ed Perkovic

Ask a seasoned executive and they will tell you, HR experience is not typically a requirement for executives being groomed for the C-suite. And the reverse is also true, HR executives often do not get the opportunity to participate in cross-functional assignments to learn and apply their HR experience to other areas of business operations.

In many ways, it is remarkable that this trend persists in an era where there is growing awareness that human capital management is critical to business success. In other words, now that we all know that most companies live or die on the performance of their employees, why isn’t HR being seen as an essential part of business operations? And moreover, why aren’t more top executives being asked to lead HR as part of their upward career path?

Part of the problem is the long held misperception that HR professionals do not know, and thus are not fluent in, the intricacies of the businesses in which they work. HR is too often seen only as a cost centre where initiatives have little direct connection to an organization’s “bottom line.” This misperception is re-enforced if HR, in some cases, has trouble enunciating a business case for their initiatives.

As a result of this inaccurate perception, too often the senior-most HR executive does not report directly to the president or CEO, a telltale sign of a lack of influence. It also means that when HR is brought into a conversation, it is usually to find contractors to assist with talent searches, training, or advise on the legalities of terminations, labour law, or collective bargaining agreements. HR is all too often simply not part of discussions on overall organizational strategy. A common complaint from HR practitioners themselves is that they are only consulted after decisions have been made. Or, that they are consulted on tactics rather than strategic planning.

However, there are increasing signs the HR profession has finally recognized the circumstances that are limiting their organizational influence. New generations of HR executives are coming to their organizations with MBAs and other business experience and education. Once hired, they are reaching out to other areas of their organizations to fully understand what makes them tick.

And although it is still the exception, a growing number of companies are asking senior executives to gain experience in HR as part of their career development.

How can HR execs, and the organizations they work for, improve the situation?
The solutions are simple, but require dedication on the part of both to change culture.

The HR Exec: Business Leader First, HR Advisor Second

If the biggest complaint about HR is a lack of knowledge about business operations, then the solution is pretty clear: acquire business knowledge. Quickly.

Understanding the intricacies of the business helps establish a connection between HR initiatives and business results. Know the impact (both positive or negative) of different human capital programs on your organization’s bottom line. Be prepared to build a clear business case for an initiative with tangible business metrics. That effort will be rewarded with greater respect for what you do, and a greater understanding of why human capital programs are important for business success.

It’s also important to be mindful of other initiatives and priorities in your organization when plotting HR projects. For example, it may be a bad idea to unleash an employee engagement survey at the same time the organization is struggling to complete year-end reports. It is remarkable how many HR projects are ignored or derailed because they conflict with other business processes. As a HR leader, it is imperative you build a team that possesses both an understanding of how the organization makes money and the daily realities of the management teams they support.

Perhaps as an HR exec you are saying “but I have deep knowledge of my business.” In this situation, the problem is not so much whether you have these attributes, but whether you expect the same knowledge from every member of your team. Unlike other support functions like Finance, HR often does not have the same depth of rigor, analytics and external certification. It’s really up to HR executives to ensure their teams are seen as business leaders first and HR advisors second.

Although a growing number of companies have a formal cross-functional rotation system in place that sees senior executives rotate through HR, business knowledge can be acquired in less formal ways as well. Collaboration with leaders from other business units within your organization, and talking to them about what it is they do and how HR could help. Don’t just record their concerns; make an effort to truly understand all of the challenges they face.

The Organization: Make HR a mandatory stop on the way to the C-suite

Some of the world’s most successful companies know that the best executive teams are those that have insight into all areas of business operations. General Electric, for example, has employed a program that gives entry-level HR staff a chance to rotate through other areas of a company as part of their HR training. This gives the HR staff a broader understanding of how the organization functions, which leads to greater influence and more effective programs down the road.

Other organizations have taken the time to move all executives through a rotation that includes HR. In addition to bringing other business skills and expertise to the HR portfolio, this cross-functional rotation allows the culture and methodology of HR to spread throughout the organization. The end result is that human capital strategies almost inevitably become part of overall organizational planning when more than one member of an executive team understands how important these strategies are for business success.

Far too many organizations suffer from a disconnect between HR and other areas of operation. Leading or best-in-class organizations are showing that this rift need not exist. Moreover, formal or informal cross-functional pollination can create better HR executives, and better senior executives in general; executives who are able to address the needs of the organization, rather than the needs of a single area.

What is your organization doing to make HR a more essential part of business operations?

Nancy Gore is principal, Leadership Solutions at Knightsbridge.
Ed Perkovic is director of Research at Amrop Knightsbridge.

© Knightsbridge Human Capital Solutions 2013 – www.knightsbridge.com