What is the Board’s opinion of HR?

A Reader asks RecruitAdvisory ……

What is the Board’s opinion of HR?

Management’s opinion of HR – from reading reports on job cuts in HR, and ignoring Alan Sugar’s remarks on the profession –  Board members of large enterprises think HR is a cost that should be radically reduced because its impact on the top and bottom lines is not direct. From my own connections, I know that it is the CEO and CFO, not the Head of HR, who are making the majority of strategic HR decisions. An example in a round-about way is taken from an interview with Keith Brownlie, Group HRD for Informa plc, a huge international publisher and information provider, who says:

“One of the key HR relationships is not actually with the CEO, it’s with the financial director. He sees the business in terms of cost, of course, but if you can get him to understand social cost, and understand people benefit not in a financial sense, but in an overall business health sense, then you can really make things swing. I’ve worked hard on that key relationship with the financial director here” (Personnel Today, 19 June 2009).

It’s not surprising, then, that a number of Heads of Resourcing of large enterprises I know are applying to CFOs to report to them rather than to HRDs simply to get access to the Board and be able to put the business case for adequate budget.

And the case for many is compelling: if you can hire business-critical people who will themselves make money and/or reduce costs, then you are directly increasing the profits of the enterprise. You are yourself a Profit Centre. If you can demonstrate you are directly increasing profit, you can argue for a bigger, not smaller, budget. And once you have made this case, even if the Board do end up giving you a smaller budget, you will have won the right to push back again and say “Okay, if I live within a smaller budget, what parts of the profit that I am delivering to you do you want to forego?”

But many Heads of Resourcing either do not get access to the Board to argue this compelling case, or fear for their careers to do so.

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