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Although she had some familiarity with compensation issues from her days running colleges, there were many crucial HR functions she knew nothing about. The knowledge gap increased when she selected an engineer rather than an HR professional as her top deputy.
Some of the moves sparked dissensionand desertion from the HR ranks. I made some changes that were very uncomfortable for some people, says Shaw candidly. Some retired or went to other companies. As a result, there were some moments when I was worried about our bench strength in technical areas, such as administering the Family and Medical Leave Act.
It bothered me at first that she had no HR experience, says Shaw. But now that she has her team in place and knows their strengths, it doesnt bother me anymore.
Shaws experience is hardly unique. The top HR executive at about one-fourth of large U.S. businesses started the job with no HR experience, according to a survey by the Center for Effective Organizations at the University of Southern California (USC).
An HR Magazine check of the largest U.S. corporations had similar results. At 53 Fortune 100 companies that would provide their top HR executives resume, 12 came to their position without a background in HR. (Spokesmen at the other 47 declined to reveal their top HR executives background.)
Its also happening at small employersmany of which lack the large corps of professional HR people that Shaw depends on.
There seems to be a trend of more and more of these people with backgrounds in accounting, finance and law running HR, says Richard W. Beatty, a professor of human resource management at Rutgers University and a faculty member at the University of Michigans Executive Education Center.
There are many reasons behind decisions to put smart but HR-deficient businesspeople like Shaw in charge of HR, say HR executives, researchers and consultants.
The trend is fueled in part by the great pressures onand short tenures ofcorporate executives, says Pam Farr, CEO of the Cabot Advisory Group, an HR consulting firm in Bedminster, N.J.
Its really important to ask why this person was selected, says Jerald Jellison, an author, HR management consultant and social psychology professor at USC. You need to know the CEOs thinking on this. What is the agenda for HR? Is it to clear up problems?
For example, a CEO might believe that HR is not contributing toor is standing in the way ofcorporate financial goals. The executive hopes that a fresh face can shake up the operation.
Often, The view (from management) is that HR just doesnt get it, therefore youve got to put a line person in the HR function to focus on priorities, says Jeffrey Schmidt, managing director for innovation at the New York-based consulting firm Towers Perrin.
The Center for Effective Organizations reports that 78 percent of corporate officers surveyed believe that HR should be a partner with top management in the effort to build a strong executive talent pool. However, only 27 percent of the corporate officers believe that HR is performing that role.
Or, a line manager who has fallen out of favor with top management is put in charge of HR in the belief that his or her performance in HR wont be as much of a detriment to the company as it might be in sales or in another part of the operation.
And sometimes a line businessperson is sent in to teach business skills to HR staff and to show them how they can contribute directly to the organizations bottom line.
Results Vary, Too
Is the trend bad? Experts say that it depends.
My gut feeling is that there is a wide variety of performances out there by outsiders running HR operations, says Dick Judy, director of the Center for the 21st Century Workforce at the Discovery Institute in Seattle. Some will do well even without the background. Some look like disasters.
HR practitioners and experts are reluctant to point fingers at specific executives who failed such assignments. But they warn that throwing an HR novice into an HR leadership post with little support above or below is fraught with peril.
Theres a big learning curve for the new HR executive, says Ed Lawler, a professor at USCs Marshall School of Business and co-founder of the Center for Effective Organizations. In small organizations, if the HR staff is thin on experience as well, says Lawler, you can end up with the blind leading the blind.
Sometimes they go in with their own pent-up frustrations from past dealings with HR, notes Michael Losey, SPHR, an Alexandria, Va.-based executive consultant and a former president and CEO of the Society for Human Resource Management.
HR isnt the only function to be led at times by an executive who possesses no applicable experience. But there are situations in which a lack of HR experience at the top of the department is particularly worrisome for an organization.
Focus on the Business
When it works well, experts say its because putting a strong business person in charge of HR succeeds in making it more strategic, integrating it better with the business and giving it more responsibilities than narrow compliance or transaction-intense functions.
HR people must be able to read and understand ... an income statement, a cash-flow statement and a balance sheet. They must also know how their programs will affect each of them, states Bruce Ellig, SPHR, a New York-based HR consultant and former HR director at pharmaceutical giant Pfizer Inc.
Going outside HR to hire top HR managers is often recognition by companies of the critical importance of the HR function in the success of these organizations, says Duke Energys Shaw.
Do CEOs understand HR well enough to know the implications of bringing in an HR novice to run the operation? For the most part, they do, says James Bagley, who leads the HR practice at the New York-based executive search firm Russell Reynolds Associates. It follows that HR people who welcome the selection of an HR outsider to run their operation will fare the best, he says. (See How HR Can Respond, right)
Were seeing a new breed of HR talent with business interest and experience, says Bagley. To rise in the profession, he says, take advantage of any opportunity to learn about HR and how it reacts with the business.
Mastering traditional HR functions isnt enough anymore for HR professionals, says Kathy Hopinkah Hannan, who runs the HR operation at the New York-based professional services firm KPMG.
I talk with my team and tell them that HR needs to be anticipatory, says Hannan. You cant really do that unless you really understand the business. Without that knowledge, its very difficult to take it to the next level.
It Doesnt Take a Technocrat
Regardless of their charter when handed the reins of HR, many non-HR executives talk candidly about the operational concerns and sometimes bumpy ride they experienced.
William Pine, who worked in operations for the 380-employee Hackbarth Delivery Service in Mobile, Ala., when his boss asked him to take over HR, was surprised by some of the problems he encountered. There were plenty of ughs right away, he says. In addition to tackling conflicting and overlapping regulations, he had to deal with some company practices that didnt seem right to him.
Moving to HR was an eye-opening experience, as well, for Atlanta-based Southern Co. Senior Vice President Christopher Womack. You dont realize how complex and technical HR is. Its incredibly intimidating at first.
Its a continuing struggle, Womack says. How HR packages the things it does is very important. Its complex, and it turns [non-HR] people off very quickly. You have to present the issues with as little legalese as possible.
Womack says he does not consider himself an HR person. Im proud to be doing this, he declares, but I dont think Ill be doing this forever.
Yet such a stewardship of an HR department can be productive and successful, many say, even if it is temporary. When Ellig retired from Pfizer, management brought in a non-HR person, in part to provide a fresh evaluation of the operation from an outsider. After a merger with Warner-Lambert was completed, Pfizers top HR job was given next to Rob Norton, who has substantial HR experience and refocused the staff on technical HR functions.
It worked out fairly well, says Norton, who in past jobs has put HR novices in charge of HR operations. Sometimes its a leadership decision. Sometimes its part of a development plan for an executive. If youve got a fairly strong organization, it doesnt take a technocrat to run HR.
But for HR leaders in certain fieldssuch as emergency medicinedeep knowledge of the business is particularly crucial, says Mary Bulkovitch, director of human resources and continuing education at Waterbury Hospital in Waterbury, Conn. The clinical aspect is very important for most job applicants and for existing employees who deal directly with patients, notes Bulkovitch.
When the critical-care hospital had to choose its HR leader between an HR person and Bulkovitch, a nurse who did not know much about HR, she got the post.
At first, she didnt feel like an HR person: I was on the outside looking in. Soon, though, she hired an assistant who was more versed in HR than in medicine, and she started learning the language and the details of HR.
But industry expertise must be tempered by sound people skills and political acumen, especially for an outsider taking over HR. If you come in and think you have to be an expert on everything, youll have problems, says David Ruttman, who had no HR experience before becoming vice president of human resources for BlueCross BlueShield of Oklahoma. At first, I didnt realize the level of internal politics, the diplomacy necessary in the job, says Ruttman, an attorney who was a manager in the claims division when asked to make this switch. So Ruttman said to his staff: You can help me learn.
Non-HR people taking over HR operations need to show a deep appreciation of the individuals who have dedicated themselves to an HR career, says HR consultant Farr. Dont disenfranchise your HR professionals.
HR staffers who might be unhappy about changes in HR leadership have to think of it in the total business perspective, Farr adds. Realize that this is the leader. Theyre not trying to learn HR in 15 minutes.
It can work, adds Farr. It can be very healthy.
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