Why HR lost its’ spot in the executive committee

Professor David Wilson figures that HR spends 85 percent of the time fixing concrete things such as making sure everyone is paid correctly, hiring and firing, training and checking the work environment*.  The remaining 15 percent spent on strategic work simply doesn’t qualify for a spot in the executive committee.  That along goes a long way toward explaining why HR has such a hard time maintaining the spot it had some ten to fifteen years ago.

HR does functional work but wants to be strategic

HR does functional work but wants to be strategic

Add the talent differential: students going into HR usually have lower grades in high school than business students do.

Add the business language of numbers: HR people seldom chose that orientation for love of numbers and ratios. Business people often do. Their language becomes the language of management teams and boards which drives short term results focus over long term development.  Try presenting engagement survey results while leaving fresh sales forecasts on the table and see how much attention you get.

My long term research project is about that. First I followed the engagement survey results of 30 publicly held corporations over a decade. The results show that engagement survey results predict profitability in the medium term and stock development in the long term.  Next, I invested in publicly held companies based purely on engagement survey results. This portfolio grew 58 percent over the last 15 months. It has outperformed the corresponding indices by far.

The result of investing purely on engagement survey results

The result of investing purely on engagement survey results

A strong strategic HR director would use this to steer her company toward higher value, but this is not happening. That is how weak HR has become.

No longer part of the strategic apex

No longer part of the strategic apex

 

Do you agree?

 

 

David Wilson is a professor in organisation studies at the Open University

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