Paul Aldrich: HR as a business partner – an overview

For more than two decades, we have been hearing HR professionals discussing how they can put themselves at the heart of their organisations and win a strategic role at the top table. But in most companies, they are still nowhere near that goal and the top table remains as elusive as ever. Moreover, the very notion of HR as a ‘business partner’ is coming under the spotlight. Why can’t the COO perform a business partner role? After all, they already look after IT, finance and operational issues. And, when it comes to HR generalists, where is the value-add?

Specialist functions such as talent Acquisition, L&D and compensation and benefits might demand specific HR expertise, but the the more general role of HR as business partner is much less clear cut. If HR professionals want to be accepted and valued as business partners, they need to work hard to prove their value to their colleagues in other functions. Credibility, after all, is something one has to earn.

One of the findings from my doctrinal research at Durham Business School is that credibility is something that is built at both an institutional and an individual level. For example, the area of compensation and benefits appears to be one where the HR function is institutionally seen to have credibility and is therefore well placed to influence significant decisions in this area. However, the credibility of business partners in generalist roles is more likely to be linked with their individual performance.

Reflecting Dave Ulrich’s view that HR professionals should be seen as ‘credible activists’ delivering results with integrity, sharing information, building relationships of trust and executing their roles with attitude, my own research highlighted nine factors that may influence the credibility of human resource business. Business managers and human resource professionals were asked to rank them, with business managers results as follows:

• HR’s knowledge of the external competitive environment.
• The trust and empathy the manager has with that HR representative.
• The track-record of an HR professional in delivering their part of the business plan.
• The track-record of the function as a whole in delivering HR support services to management.
• Knowledge of human resource practices and procedures.
• HR’s knowledge of the internal competitive environment.
• The availability and use of data to analyse the business impact and effectiveness of HR initiatives.
• Academic qualifications.
• Membership of a professional body.

Trust was ranked the same by human resource professionals, but they ranked knowledge of the external business competitive environment fourth vs first place for the business managers and interestingly business managers ranked knowledge of human resource practices and procedures fifth while human resource professionals ranked it seventh.

In addition when business managers were asked in my research what other aspects gave HR credibility they also cited:

• The proactivity of the HR professional.
• The courage of that individual to stand their ground.

The CIPD has also conducted research into the common obstacles and barriers to the achieving a successful business partnership. These were noted as:

• Line managers without the skills or desire to take on more or do things differently.
• Poor, expensive or transactional human resources services and intranets.
• Human resources professionals with little skills or experience to succeed as business partners.
• The absence of a consistent business strategy with which the human resource function can work.
• A human resource agenda that is set independently of the business.

Additionally, the CIPD research found that a third of human resources professionals who describe themselves as ‘strategic partners’ had a seat on the board compared to less than a fifth of those who didn’t describe themselves as strategic partners. Respondents who described themselves as strategic partners also had greater involvement at all stages of strategic planning as well as at the early stages of planning.

With the area of people-related risk becoming an increasingly important one, the risk agenda is another area in which HR can build its credibility. Here again, however, the HR response must be aligned with business objectives. HR professionals need to both identify potential problems and propose realistic solutions if they hope to prove their value to business managers.

All of this is of course dependent on the CEO and the board thinking strategically about talent management and the importance of the company investing in its people and my research also indicates that in situations where a talent savvy CEO is present, with appropriate influence over their board and senior business line management, and a highly-credible- and therefore influential -senior HR professionals exist, then a situation of resonance can occur and the relative competitive advantage of the organization gained through people will be maximized.

However, where a talent savvy CEO is present, with appropriate influence over their board and senior business line management, and a highly-credible senior HR professional does not exists, then a situation of dissonance can occur and the relative competitive advantage of the organization gained through people will be high, but not maximised. This is because the CEO will only proactively use their business line managers to champion HR initiatives and will not access the tactical and strategic advice that can be provided by highly-credible and influential senior HR professionals.

Where there is low CEO competency and low senior business line manager understanding with regard to human resource issues but high HR competency, then a situation of presence will occur. There is strong HR expertise but senior management do not understand how to harness the benefit of this and therefore the relative competitive advantage gained through people will be low.

The worst case is where there is a lack of CEO and senior business line manager understanding with regard to human resource issues coupled with a poor HR team. A situation of absence will occur and the relative competitive advantage gained through people will be minimised.

Overall, the findings indicate that the competitive advantage gained from any firm from their people is where the CEO has high levels of competency in strategic human resource management and where HR professionals are seen as highly credible and is involved in the management of the business on an integrated basis .In these cases CEOs are likely to proactively use their human resource professionals, will champion HR initiatives and help to drive these through the organization.

So how can HR professionals hope to become better business partners?

Knowledge of the external competitive environment.

The knowledge of the external competitive environment is important to business line managers who rely on HR professionals for the `boundary spanning` capabilities to gather competitive data on business structures, headcount, performance and advice on regulatory activity. Review the talent market by talking to head-hunters and your peers, look at trends in areas such as compensation and talent management. Look at what the business is trying to do and be the person who can advise on what is possible.

Use this information of the external competitive environment to highlight potential people risks to the business. This is especially true in fast-moving sectors like financial services which has some very bright people dealing with massive risks and pressure on a daily basis.

The trust and empathy the manager has with that HR representative.

Senior level business partnerships must rise above and beyond office politics or HR will alienate itself from the rest of the business and dilute their effectiveness. In order to win over management HR have to `tell it how it is` and be known for giving an objective and honest response. Be known for being frank and authentic. This will be the sort of confidence required if management is to confide in HR on the more strategic and sensitive issues within the business.

This works in both directions. The line manager’s trust and personal empathy with the HR professional is important. A technically sound and highly experienced HR partner may find it hard to build credibility where the levels of empathy and trust are low.

The track-record of HR in delivering on their part of the business plan.

The track record of HR delivering their part of the business plan is important and like other client service focused roles, credibility is only as strong as the last successful delivery. The track-record of the HR function as a means of delivering human resources service support to the business manager is not insignificant.

The individual HR professional’s hard work at establishing credibility can be undermined when basic human resource administrative tasks go wrong and irritate line managers. Where possible use data available to analyse the business impact and effectiveness of HR initiatives and make sure that key stakeholders are aware of this.

The track-record of the function as a whole in delivering HR support services to management

HRBPs’ hard-won credibility can be undermined when basic HR administrative tasks go wrong, to the irritation of business managers. In other words, credibility is transient and only as strong as the last delivery. It’s a continual case of winning credibility with the management group. What you’ve got to do is deliver consistently. Rather than talk it, do it.

Knowledge of human resource practices and procedures

Whether HR professionals like it or not, administrative expertise matters. It is clear that to have credibility in the eyes of other managers, HR professionals must first be seen to be getting the “nuts and bolts” right before they have any chance of offering any value-adds. Being seen to have the right HR-specific knowledge is therefore a prerequisite of being considered a business partner.

Knowledge of the internal competitive environment.

Understanding the internal competitive environment is based on building social capital within your organisation. The formal organisational structure is only half the picture, the informal dynamics and the key stakeholders central to this dynamic are just as important. Whilst you need to understand the power dynamics of your organisation, do so without playing politics. Keep your ear to the ground and what you hear and see absorb like a sponge.

You won’t be considered an HR Partner or earn the respect of management unless you understand the inside track and the subtler nuances of what is going on within the business. Find out who are the influencers in the organisation. Know who is respected by others. Who gets things done? Are you plugged in where you need to be?

The availability and use of data to analyse the business impact and effectiveness of HR initiatives

HR has to deliver and it needs a way of proving this. That doesn’t mean data that measures the efficiency of the HR department, it means demonstrating its business impact with regards to net revenue and market share. Business managers are really turned off by HR jargon. So HR needs to speak the same language and use the same metrics as the rest of the organisation.

Membership of a Professional body and Academic qualifications

As far as business managers are concerned, professional and academic HR qualifications are of limited value. Professional training is perceived – rightly or wrongly – as delivering only the sort of base-level competencies which senior HR professionals are expected to have long ago mastered.

In others words, as an HR professional it is clear that your credibility as an HR professional is built on personal qualities, relationships with key constituents and track record in delivery.

The proactivity of the HR professional.

During my research, a number of line mangers commented on the importance of proactivity by HR professionals if they want to be regarded as business partners. Be brave and find a project where you an champion a cause and take the initiative on an issue. This is why it’s so important to really understand the objectives of the business and be on the inside track. Don’t just raise a problem. Find something where you can really add value by pointing out the implications for the business.

The courage of that individual to stand their ground.

It’s also important for HR to stand their ground on what they see as the key issues within the business. To be considered a strategic partner HR has to go behind the box-ticking and compliance, and be prepared to challenge management thinking and the systems and processes within a business if necessary. The courage of conviction and sticking to your guns regardless of internal resistance is important and comes with the territory of being an HR business partner.