Justifying talent to boards
Generally accepted accounting principles are not kind to the HR executive. Almost every investment request at board level is to add or improve an asset.
People, on the other hand, by virtue of being on the payroll, are listed on the balance sheet as a liability. Therefore, hiring and developing talent is more difficult to justify to boards which typically look at everything in terms of return on investment and internal rate of return.
What hope do you, as an HR director, have when asking for resources against the black and white calculations produced by the VPs of marketing, operations and finance?
Why invest in people?
As a result of this phenomenon, I see HR professionals in the Middle East (with some exceptions) struggle to gain buy-in for investing in people. Instead of creating a case around how new hires will impact the business, HR often spends too much time influencing the business sponsors to believe in their cause, unsubstantiated though the reasons for the support may be.
So your success is completely predicated on the quality of your internal relationships.
There is a case for at least meeting the ROI burden half way. I would argue that doing so would not only assist the HR function, but it would start to change the paradigm of HR as a secondary function, and ennoble those who have dedicated their professional lives to their talent.
At London Business School, when we started thinking about tackling this significant challenge of assessing talent development, or how we measure impact, we came up with this premise: begin with the end in mind.
Assess your talent
When we speak to our new clients about the impact of the future executive development work in the GCC, we start with the business versus the personal impact. What difference would we see in the business after so many months or years as a result of this programme? How would we assess that business improvement? This depends entirely on each organisation’s objectives, but it could include internal promotion rate, new initiatives created and implemented with the resulting commercial benefits, employee retention, and the impact of action learning projects.
We suggest that this approach can be tailored to each organisational context and culture, and gives the HR executive a fighting chance to prove their function’s impact in the boardroom.
More importantly, the Middle East region – through a more rigorous assessment process – can sharpen the business case beyond the obviously important macro-societal needs. This will develop citizens into more senior management roles. Building the business case for people development then becomes no less than building the business case for building the nation’s capacity for leadership.