Imagine you are the incoming CEO of a struggling company. The board of directors has hired you to turn the company around as soon as possible. What are you going to do?
Obviously, you have to start with big questions regarding strategy, structure, product development, sales, cash management and culture. You will probably shuffle the top management team and provide a clear vision of what and how the enterprise has to change. You need to improve cash flow pronto.
You might get control of IT’s massive investment by moving toward cloud computing. Eventually, you reach the human resources function. You are smart enough to know the issue is not the 1.5 percent of operating expense that goes into running HR. For the company to be successful, turnover must slow and productivity must grow.
You’re not an HR professional, so you aren’t burdened by traditional thinking or a warm spot in your heart for those nice people who labor there. You start with an objective view of human capital management just as you did with management of cash, products, sales and information.
It’s probably a good idea to find out what kind of data you have on workforce productivity. Has there been any analysis at either the strategic or tactical level in the past? You could form a small analytics function to help study questions of capability, performance and past human capital investments. Nothing beats having accurate and relevant objective data on which to base the tough decisions ahead.
So, what is the best way to ensure a sustainable, highly productive and engaged workforce? A large part of the question is where should the various HR functions reside? Form should follow function.
Should they all be in a central unit or spread throughout the company where they can be agile and responsive, not to mention accountable for value generation?
You decide that, as CEO, you are ultimately responsible for the workforce, so you make strategic workforce planning, including succession planning, your responsibility. You give a senior HR executive that job and have him or her report directly to you.
A recruiting strategy is next, and where should that reside? How about putting it under the COO — the person responsible for company operations?
Next comes compensation and benefits.
Should that go to the CFO, who is accountable for cash management, or do you put that in operations as well? Maybe you carve out health and welfare benefits to finance and leave pay and incentive compensation with the COO.
Now, how are the people best developed? Should development be part of your central workforce function? Pieces such as leadership and engagement likely should go together, but where to put them?
You have short-term problems such as engagement and long-term questions of succession. It’s complicated. You can’t just toss them all together like in the past. That didn’t work.
Who is going to keep employee records and deal with governance requirements? This is sensitive stuff and getting more so every day. What about general employee relations problems? Should they be pushed back to line management where they started 150 years ago? Isn’t that what fostered the birth and growth of labor unions?
Maybe you should leave the old structure in place and just give it new marching orders. But if you take a car that isn’t running well and repaint it, does that make it run better? If HR was not a value-adding function when you arrived, can you afford to leave it as is while you redesign the enterprise? Just how important is workforce management in your new scheme?
I’m sure you will figure it out, but one thing is certain. You have to change the fundamental concept that has driven human resources and human capital management in the past. It did not serve the company well during periods of rapid change and may have been a major reason the enterprise was foundering.
After all, nothing happens unless a human being acts — all other assets of the enterprise just lay there waiting to be leveraged. It seems as though you have to give HR new consideration, because it is so important.