When the CEO becomes envious of the head of HR

There is a sense of upheaval at a company in eastern Switzerland, though not in a positive sense: sales figures are stagnating, and in some markets they are even declining. Cost pressures are mounting, and the outlook for the next two financial years looks bleak – double-digit losses in the annual results seem inevitable.

Amidst this tense situation, the HR department steps in. It presents the CEO with a comprehensive implementation plan to improve EBIT margins across all business divisions. What is surprising is that this plan was not drawn up externally, but is the result of a two-day internal workshop involving all HR business partners from the four product divisions, as well as the head of HR himself.

The CEO is visibly impressed by the HR department’s professional and well-thought-out approach and immediately shares the proposal with the board of directors. Three weeks later, it is official: the board of directors not only gives the green light to the project, but even appoints the head of HR as the overall project manager for the implementation project. At this moment, one might say that the CEO feels a kind of quiet envy towards his head of HR.

Unfortunately, this case study is a fictional example.

What is the reality? For decades, HR professionals in many companies were viewed merely as administrative bodies. Their main tasks consisted of processing salaries, recording working hours and, perhaps here and there, taking on a few administrative duties. Their role was often confined to the level of internal service provision, far removed from the strategic importance they often aspired to.

Time and again, HR directors insisted on being included in the executive board, yet only a few achieved this goal. Some were content to be listed as members of the extended group management team – a position that, whilst prestigious on paper, often carried no real influence in practice.

As the corporate world has shifted towards a stronger focus on people management and development, the role of HR departments has also changed. In large companies, ‘HR specialists’ have increasingly become ‘HR business partners’, a move intended to give the impression that these experts operate on an equal footing with division heads and possess a deep understanding of day-to-day operations. In reality, however, this title often amounted to nothing more than a fig leaf. Many of these HR business partners were tasked with monitoring HR guidelines and ensuring compliance with internal policies. A bit like a compliance officer, but still a long way from being a genuine partner on an equal footing with business leaders.

But what does it take for an HR manager to be taken seriously as a business partner?

The answer is obvious: a deep and genuine interest in the company’s core areas, namely products, markets, finance, technology, supply chain management and sales. Only those who actively familiarise themselves with these topics can ultimately be involved in strategic decision-making processes – and, almost more importantly, be taken seriously. It goes without saying that the concerns of employees must be taken into account and the impact of changes on the workforce must be considered. But that alone is simply not enough.

In my opinion, most HR managers still have a long way to go before they achieve this status as genuine business partners. Because, let’s be honest: do you know an HR business partner who would be prepared to work on the production floor for six months to really understand the processes on the ground? Or an HR manager who accompanies the Head of Sales to acquisition meetings to find out first-hand what the market demands? How often do you hear of HR professionals taking part in important bank negotiations alongside the CFO to experience first-hand what is at stake when negotiating new credit lines?

Any HR expert seeking the strategic recognition they often aspire to must look beyond purely HR-related issues and familiarise themselves with the operational and financial realities of the company. Only then can they truly act as an equal partner and win the trust of senior management – and perhaps, in the end, even inspire a little envy in the CEO.