Ram Charan, worldwide business leader and heavily desired speaker, wrote recently if his idea to reform Human Resources in Harvard Business Review
titled “It’s Time To Split HR.” In the article, Ram argues that not all HR people have the same business skills and many HR people should not be given “a seat at the senior Leadership table”.
Why? HR can be divided into 2 functions – administration (compensation and benefits) and leadership & development. Process-oriented generalists and subject-matter experts would fit very well into the administration area (Ram uses the acronym HR-A) but rather than reporting into the CEO, they’d report into the CFO of their organization.
Their chief responsibility would be ensuring these processes are operated efficiently and accurately, with analytics given to the CFO and senior leaders
to guide investment decisions.
The 2nd function of HR Ram proposes is leadership and organization, or CR-LO). These HR professionals would be largely involved with analyzing and responding to real-world business needs and report directly to the CEO. They’d give input on key promotions and succession while building development programs to prepare
people for future challenges.
The best HR professionals, such as Bill Conaty in GE and Mary Anne Elliott at Marsh were particularly effective with this strategic function.
These people could be cultivated from areas outside HR, such as finance or operations, because a role in HR-LO by itself would give them invaluable developmental experience.
There’s no question that the role of an HR professional in the U.S. is becoming more and more challenging and complex. In addition to dealing with administration, leadership sustainability and organization development, HR professionals must keep current with the many new laws and regulations coming from federal and state governments.
Since the Obama administration does not control new legislation (that’s under the authority of the Republican-led House of Representatives), government agencies such as the Department of Labor have been given added power to enforce the laws in place.
The last few years have seen a huge increase in employee claims for wage and hour violations (eg. Employers not paying overtime properly) or retaliation (an employee files a discrimination complaint and the employer ‘retaliates’ by terminating the employee for long-standing poor performance).
The days of ‘employment at will’ or the employer having the right to fire anyone at any time for any reason are over. HR leaders need to serve 3 roles - lawyer, administrator and talent strategist. Those employers who can find human resources professionals who can do all 3 well will be in the best position to adapt and succeed.