Is HR really commercial?
Let’s face it, the phrase ‘HR needs to be commercial’ is nothing new. Yet it’s a theme that keeps recurring. Time and again we hear the argument that HR is not business focused enough and more HR directors need to be on the board.
Ellie Rich, operations director at Michael Page Human Resources, comments: “If I had a pound for every time an HR professional tells me, ‘I’m not a typical HR person, I’m really commercial’ I’d be wealthy. However, I could only name a relatively small number who can clearly articulate their commercial legacy. These gems don’t waste time labelling themselves as commercial in an interview because they’re too busy talking about the business.”
According to the CIPD’s recent HR outlook survey, HR professionals know they need to get to grips with ‘the business’. Of 1,543 participants, two thirds agreed with the notion that HR people need to ‘build the ability to understand business issues in my organisation’.
But what does this mean in the real world and for your career?
Four key behaviours
John McGurk, learning & talent development adviser at the CIPD, believes the answer lies around actively demonstrating four key sets of behaviours. Are you business savvy?
‘Business savvy’, a term coined by the CIPD in their latest report Giving HR the edge, is something McGurk is passionate about. He explains: “Without a business edge, HR people are effectively a silent, self-regarding, self-referential function.
“When we take a business savvy perspective, look at HR interventions and align these to business objectives, they are much more effective. Critical messages become more salient in the organisation and work is much more productive; engaging with employees, managers and leaders.”
The four behaviours identified in the report are:
- Understanding the business model at depth: Where is value created and destroyed within your organisation? Identify people-related improvement points which drive value & enhance performance.
- Generating insight through evidence & data: Have the courage to ask questions and look for explanations when the knowledge you need seems masked in technical jargon. Essentially, it’s about crunching numbers around recruitment, retention & engagement to ensure the right people are in the right place delivering according to business objectives.
- Connecting with curiosity, purpose & impact: Be curious about why and how the business operates, while looking for opportunities to improve. In a business trying to watch costs, for example, how are accountants trained, how are managers trained to have conversations? Don’t wait to be asked, but take a proactive approach to making connections across the business & collaborating at all levels.
- Leading with integrity, consideration & challenge: Ensure youdon’t forget the people and performance issues are critical. Have the courage to challenge the pursuit of short-term business goals that are detrimental to your people & your business’ long term success.
Challenge the presumptions about HR
Ultimately, HR is a business function and McGurk argues that the challenge is around being able to maintain that mind-set. Firstly, understanding where HR sits within your business is key to providing a context. How is HR viewed by other departments and what are the expectations? If the remit of HR is simply to make sure people get paid and keep the organisation out of court, it’s difficult to drive business savvy behaviours.
“Have the courage to challenge and ask the question, ‘what do you want us to do’? Or say, this is what we can do; and this is what the business needs. Rather than let others dictate to you how they you should keep you ‘occupied’. Don’t let them forget that. The real business centres around people and performance and that’s your role.”
Get to grips with metrics
Develop an understanding of how you deliver and demonstrate value. McGurk explains that if you work for a bread company, for example, and you know grain price is a critical issue, you need to make sure you’re resourcing at the right level, managing performance and rewarding employees according to the cycle of production.
“If you’re not operationally focused it’s easy to forget what actually goes on in the business you work in,” he warns.
Knowledge of company finances is also advantageous, but McGurk argues that you don’t have to become an expert. Be curious – find out where the company is performing, what the share price is and find out the operating profit. He says: “Challenge yourself to understand EBI (earnings before interest) tax, or debit balance, for example.”
Ellie Rich outlines the importance of business-focused metrics when you’re searching for a new role too: “Some of my clients will reject you at application stage if your CV lacks metrics. They look at the process-focused statements and say ‘so what?’
“In many cases, you might be adding value, just not taking time to review or measure the contribution in terms of output. If you’re unable to articulate your contribution, how will you perform in a challenging interview?”
For McGurk, part of the problem is that often HR professionals think a business-focused approach is only required at a senior level. He says that while many senior HR people demonstrate this capability effectively, it needs to be drilled down much lower in the organisation.
“HR assistants and advisors at the beginning of their careers need to think of their role, whether it’s in recruitment, reward, performance management etc. as part of the business, not just within the HR function,” says McGurk.
He also advises that getting out of HR from time to time is advantageous. Consider a secondment to another function, or at least talk to people in other areas on a regular basis. This way, you develop a deep knowledge of the business.
Is your team business savvy?
As a leader, how can you ensure your whole HR team is commercially focused? McGurk says that you need to have integrity and then your team will look up to you as a respected role model. He says it’s about role-modelling commercial behaviours – talking about ‘the business’ constantly, so begin HR meetings with business questions: ‘What’s the share price, the latest growth, the latest news’? If you start a meeting by talking about HR issues: ‘We’ve delivered this engagement strategy, we’re dealing with this payroll problem…’ etc, you’re starting at the wrong end of the telescope.
McGurk concludes: “You can fit the HR issues around people and performance neatly into the business discussions. This way, you’ll be much more effective and build that mentality into your team. Being business savvy isn’t boardroom servility. Your role is to translate the business agenda.”
Where to start?
We ask Liz Ogden, HR director, G4S: Get out and see things for yourself. Speak to people at various levels and build your own picture. Validate what you’re told. It’s about being able to discuss the P&L with the finance director, discuss the business pipeline with the sales director as well as explaining the people agenda. It also helps to have worked outside HR at some point in your career.
Have the curiosity to understand what makes your business tick. How do the people you employ create value? It’s important to pick up on developing issues and to be agile and creative enough to develop appropriate and timely solutions.