Is Your HR Department Focused on People or Profit?

New report describes HR as “a function at odds with itself’

Kathy Gurchiek By Kathy Gurchiek February 28, 2020
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Is Your HR Department Focused on People or Profit?

There are two distinct groups of HR leaders with different points of view about the purpose of HR: One group sees its primary job as helping the company maximize profitability. The other group sees its primary job as helping people grow and develop.

The findings are from a global survey of more than 1,200 HR practitioners conducted by New York City-based Talent Strategy Group. 

"HR is a function at odds with itself," the report said. "This split view will confuse business leaders and employers as to where HR's loyalties [lie], and this will further erode trust in the function. Either viewpoint is valid, but only one can exist in a company at any point in time."

[SHRM members-only toolkit: Developing Organizational Leaders

Other findings:

  • 70 percent of respondents are interested in helping people grow.
  • 50 percent want to help their organization maximize its profitability. 
HR can focus on employee development but, if that development is not aligned with the company's business goals, there is no link to profitability, explained Marc Effron, president of the Talent Strategy Group. He also is the author of One Page Talent Management and 8 Steps to High Performance, both published by Harvard Business Review Press in 2018.

  • 25 percent say they have experience in HR and talent analytics.
  • 21 percent rated themselves as having meaningful diversity and inclusion (D&I) experience.
  • Only 15 percent want to learn about their organization's other business functions. This suggests a lack of curiosity about the business overall, Effron said. 
"A decent number of HR leaders are not passionate about 'business' writ large," he said. They don't see the value in learning about other departments. That coincides with the majority of respondents who said their managers would assess their weakest areas as being influencers and possessing a deep and thorough knowledge of the business. 

HR professionals felt they have the greatest experience in learning and development, HR strategy and talent management. 

Separate Personas

​Typical characteristics of HR leaders with the strongest business-related reasons for being in HR:


Typical characteristics of HR leaders with the strongest people-centric reasons for being in HR:
​Is 45-54 years old.
​45-54
​55-64
Is 55-64 years old.​
​Is male.
man
woman
Is female.​
​Has a master’s degree in business administration.
business admin
HR
​Has a master’s degree in HR.
​Employer has more than 100,000 employees.
big business
small business
​Employer has fewer than 1,000 employees.
​Is a senior director or higher.
director
VP
​Is a vice president.
​Is willing to sacrifice personal time for career success.
fast clock
slow clock
Is moderately willing to sacrifice personal time for career success.
​Sleeps five to six hours per night and reports a lower quality of sleep.
bad sleep
good sleep
Sleeps about seven hours per night and reports a higher quality of sleep.
​Is no more or less stressed than other HR leaders.
​​=
​Is no more or less stressed than other HR leaders.

Different Personas 

One of the characteristics of HR professionals who are more
people- than profit-oriented is a focus on growing and developing employees, but that development is disassociated from profitability. They are not considering "what exactly they're growing and developing [the employees] for," Effron said.

People who are in HR to help their company be profitable are distinct in three ways from those whose goal is to help employees, the report found. The profit-focused persona tends to work 50-70 hours a week, sacrifice personal time to reach profit-related goals and have C-suite aspirations.

About a third—31 percent—of these HR leaders said they want to be a CHRO.

"What [those] people are saying is [HR is] not really where I want to spend my time," Effron said.

When they are in that C-suite role, it's not for long. The average tenure for a CHRO is 3.7 years, down from five years in 2016, according to Korn Ferry, an organizational consulting firm in New York City. It released an analysis it conducted on the tenure of those in the C-suite.

"The CHRO is a confidant to the CEO and deals with a lot of privileged information," said Daniel A. Kaplan, senior partner at Korn Ferry. Boards can increase tenure by enhancing efforts to find "talent-oriented CHROs steeped in strategy, business fundamentals and culture," he noted in a statement about the findings.

Talent Strategy Group's report suggests that HR may need to look outside its function for a CHRO. Doing so, it noted, "may be more a blessing than a curse if that external pipeline has more leaders who want their business to win, who understand business and who can effectively influence senior leaders on the people issues that matter most."

External CHRO candidates likely will take a different approach to HR and "cut through any bureaucracy they see in the HR department," Effron said, because they bring a fresh perspective. They can ask what practices the company has that aren't delivering as effectively as they should and if there is "a radically simpler way" to accomplish its goals.

"We're not saying either [persona] is right," he said, "but it's likely your CHRO has one of these mindsets, or a healthy balance, and will operate the shop according to their view of the [HR] world."

What is important, he added, is that the CHRO is transparent about his or her perspective and how decisions will be made about important HR issues. HR professionals also need to be aware, the report pointed out, if their view of HR's strategic value and their organization's view are aligned.


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