The past decade has seen one of the more spectacular phases of economic growth. Ironically, the world also witnessed a huge talent crunch, as companies found it difficult to find the right people to fill its ever-growing needs. As a result, HR started assuming greater criticality than ever before in terms of attracting, recruiting and retaining talent.
It is widely believed that a function reaches its pinnacle when its leaders’ presence on the Board is considered mandatory. Ironically, even as HR’s functional importance grew, it remained absent from the C-suite (albeit cosmetically). A look at the visiting cards in any folder reveals that while there will be an assortment of designations – CEO, CTO, CFO, CMO, among others – there is rarely a Chief HR Officer, or CHRO! Mostly, the head of the human resource function is called by many other names but this. While it might be argued that conventional wisdom need not be always correct, the fact remains that only seven of the 30 companies in the BSE Sensex have their HR heads on the boards!
Today’s HR leaders face three critical questions:
1. Is it really important for them to be part of the Board? Or can they provide value regardless of any formal position on the Board?
2. Does heading a function qualify a leader for the Board?
3. Keeping the above in mind, how can HR leaders chart their growth path?
“The role of an HR manager has changed dramatically over the last few years,” says R. Sankar of PricewaterhouseCoopers. From being associated with just personnel officers and admin managers, HR has evolved into the custodian of talent acquisition, talent retention, mentorship, and so on. While some believe that the HR heads serve as vanguards of a company, there are others who feel that the key role of an HR person is to be the sounding board to the CEO - more reasons why this person should be accessible to the CEO.
There is little argument that HR is critical. Take the case of Sanjeev Bikhchandani of Info Edge, which operates Naukri.com. In the initial days of the company, the HR functions were kept well within the ambit of the promoters. It was only in 2003 that Info Edge hired a head of HR, and that too, after testing the person on a contractual basis. “I wanted to ensure that we did not hire the wrong person to head the HR function, as that would create chaos,” says Bikhchandani.
Santrupt Misra, Director, Aditya Birla Management Corporation Pvt. Ltd, an HR pioneer, however, feels that it was not vital for HR leaders to be on the Board. Rather, he urged them to work on “meaningfully influenc(ing) the discussion from outside,” as that would actually add value to the enterprise. He believed it was not proper to measure success by evaluating whether the HR leader was inside or outside the Board.
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“HR has remained a very opinionated function. It has
to move from opinions to research and analysis.”
- Anil Sharma, Vice President-HR, ITC Hotels |
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So while there are CEOs like Bikhchandani who are willing to give HR the importance it deserves, it was clear that it would also be entirely on their own terms. The head of HR may not sit on the Board but she is still seen as serving a vital role in the company and providing value.
Does this imply that the person who performs the role holds greater importance than the role itself? Is this treatment reserved only for HR? Does this reflect too much of a step-motherly treatment to a function that is supposed to become even more critical in the future, given that people are increasingly becoming an organisation’s most important asset?
Many believe that the fraternity itself is largely responsible for this situation. “HR has remained a very opinionated function. It has to move from opinions to research and analysis,” says Anil Sharma, Vice-President-HR for ITC Hotels, who sits on its management committee but not on the Board.
Another bias that HR professionals have to fight is that they operate in isolation. Even in a MBA programme, HR is perceived to be a soft option, while strategy and finance are considered hard subjects. Therefore, practitioners usually have to employ quantitative tools, research and analytics to get over this bias.
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Words of Wisdom
He’s counted among the top HR professionals in the country. He’s managed to break the glass ceiling and find himself a seat on the Board of the USD-29-billion Aditya Birla Group. Here is what Santrupt Misra believes helped him get where he did.
- A point of view and making it come alive in the right context.
- The courage to confront holy cows, stand up for what I believe in, confront business leaders, call a spade a spade, and put other narrow interests on the other side in trying to achieve what I believe in.
- A very broad spectrum of interests beyond HR. A well-reasoned point of view on many issues, particularly strategic, and the ability to have an intelligent conversation on a range of issues with a variety of business colleagues in areas of their specialisation.
- Making colleagues believe that I understood their issues and challenges. People saw me adding value to different sectors and different contexts, so they felt comfortable asking me to contribute.
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There is also broad consensus that HR needs to enhance its effectiveness to make further progress in an organisation’s hierarchy. HR leaders are also realising that the journey to the Board requires linking HR to other business functions and gaining a broader and deeper understanding of other business needs. Take the example of Gagan Jyot, the HR head of RMSI, which has featured in the list of best employers year after year. Her company mostly hired engineers in keeping with its line of work, but Jyot made sure that she created a place for herself in the organisation by making an attempt to understand the business. “I went for client meetings, and aligned myself with the client and market situation,” recalls Jyot. No wonder, she was on her way to receive yet another award on behalf of her employer.
Another perception about HR managers is that they do not understand business. A recent survey across markets by IBM Daksh, which assessed the business acumen of HR professionals, also points to this. Most respondents felt Indian HR professionals had less of business acumen (50%) when compared to their counterparts in developed markets – another key obstacle in an HR leader’s journey to the Board.
Biplob Banerjee, Chief HR Officer, Dainik Bhaskar, set the cat among the pigeons when he pointed out that organisations usually do not consider “outsiders” when they look for CFOs or CMOs. But the HR function is routinely “lent” to other types of professionals. It might be important for HR leaders to assert their independence in this regard, and insist that only HR professionals get to occupy that position.
HR is also highly dependent on the CEO’s expectations from the function. If a chief executive has a long-term vision, then he cannot afford to ignore HR. One way CEOs can help HR professionals move forward is to set clear expectations, KRAs and performance goals for HR professionals at an early stage. As professionals reach the top level, their business knowledge becomes more important than functional competence. It is important to have a visionary CEO to support and nurture this process.
As D.P. Singh, Director-HR, IBM Daksh Business Process Services, points out “the CEO can play a key role by challenging HR through business problems”. If the CEO facilitates the HR head in learning and growing, the way Eliza Doolittle was mentored by Professor Henry Higgins in Pygmalion, perhaps HR leaders would prove themselves more often.
While it might take time for companies to appreciate how important an HR voice can be to round out the top-level team, HR pros also need to assess the competencies and knowledge they require to prove their mettle in corporate boardrooms. They need to work more closely with their CEOs to demonstrate that a top-level person with comprehensive HR expertise can make a huge positive difference to the company.
While a seat on the board is not the be-all and end-all of the corporate world, it remains the final frontier for HR leaders.
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