I’ve spent the last five years working with Human Resource leaders from the best companies in Silicon Valley on building robust leadership development programs. These colleagues are highly intelligent, and care deeply about their organization and its people. It was fascinating to watch them work on very challenging human capital problems that would make anyone’s head spin! It has been the highlight of my career to roll up my sleeves with these colleagues (now friends) and find help them find relevant solutions - I have learned so much!
During this time, I would often run into an HR leader that would say something like, “Sorry, Cam. I’d love to build this at our company - I see the value, but I spoke to finance and they won’t give me the budget.” Having worked directly under a CFO before, I certainly understand the real challenge finance people have in wading through all the great investment opportunities employees bring them. CFOs are eager to grow the company, but also must focus on balancing growth with ensuring every dime they spend brings shareholder value. Just because an idea is a good idea, it doesn’t mean it’s the right idea.
This can be incredibly frustrating for HR leaders because everyone knows how important HR initiatives are, but sometimes important projects are sidelined for shorter term business needs.
Replies like, “That’s a great idea, but we’re just not ready for that yet” can make anyone wince. Many leaders I worked with expressed frustration that HR doesn’t have a seat at the table in making these larger business decisions. Meaning, business leaders view HR as good for hiring, employee benefits, and culture but not at driving the business forward at a rapid pace. Business strategy is one thing, and HR is another thing.
Skip Spriggs, former CHRO at Boston Scientific, described it this way:"No one ever questions that the CFO knows what the business levers are. People can sometimes question whether the HR organization knows how to drive business value through people systems and processes.” In short, many HR professionals are viewed as someone who’s IN business but doesn’t GET business.
There’s no question HR adds value to the business, but defining and measuring the value is difficult. Skipp went on to say, "I don't think there's a company in America that doesn't say some form of ‘people are our most valued asset’. And generally, the person in the organization who has the most responsibility for people is the head of HR. So HR can of course bring value around talent - helping the organization find, hire, motivate, and retain the right people in the right place and at the right time.” The great responsibility of the HR function though is articulating how a defined strategy around the talent lifecycle drives the business forward.
This is a challenge, even at the highest levels of HR. Right now, only 5% of boards include a CHRO. Whether the seat you seek is figurative or literal, here are three things that will help:
1. Lead With Your Business Acumen
If you’re in HR, at some point, you’ve probably crusaded under the banner of the famous Peter Drucker quote, "Culture eats strategy for breakfast.” In a previous position, I may have even mumbled it under my breath leaving the CFO’s office after my budget was rejected. I think we’d be less frustrated if we followed up the quote by saying, "TRUE…BUT strategy is still important!”
The best way to articulate the value of culture is through business outcomes. But, it’s hard to do that when you don’t completely understand the business outcomes. Many business professionals would rather have a root canal than sit through an earnings call (where we report outcomes) and nothing is more frightening than being asked a question about EBIT in front of colleagues. I suggest you lean into this fear and develop better business acumen. And no, you DON’T need to know what your CFO knows to have solid business acumen, but you DO need to understand how your company makes money, and how you can make good decisions throughout the money-making process.
Skipp confirmed this by saying, "In addition to experience in recruiting and retaining diverse talent and creating a strong culture, HR leaders need to demonstrate a broad and deep understanding of business acumen, and have the ability to deeply understand all elements of the business, from accounting and finance, to strategy and digital transformation, all the way to M&A and driving greater value from human capital.”
How you measure your strategy, articulate it, and communicate it are all cultural issues and HR would bring tremendous value if we’re able to make the link.
2. Speak with Metrics
In writing a resume, I was told any time I can report my performance in numbers (number of dollars collected, number of employees managed, or even number of memos written) that paints a better picture to the recruiter than describing my accomplishments without it.
The market makes decisions the same way. Only instead of a resume, they’re using a 10-K! If we want to make good decisions around our company’s money making process, we have to understand and speak in terms of how we measure the business.
Of course human capital issues are incredibly complex, but if we’re able to boil them down to business levers, that helps others make solid decisions even when they don’t understand the issue fully. In sales, we use a peel the onion technique to uncover hard measurable issues. This can be used in this instance as well.
Here are some issues that can be boiled down to hard issues:
We need more leadership development to beef up our succession planning (soft). Our goal is to move turnover at the director level from 30% to 10% (hard).
We need a better HRIS to track some of our goals outside of our current system (soft).The upfront cost of an HRIS system is X dollars, but would result in a savings of Y hours of work for our staff (hard).
We need a DEI program (soft), because if people feel they are a target of bias, they are 3x more likely to leave their job (hard).
Mahan Khalsa, in his book Let’s Get Real or Let’s Not Play, suggests that no matter the problem, we need to answer the 5 golden questions used to measure a hard issue:
How do you measure it?
What is it now?
What would you like it to be?
What is the value of the difference?
What is the value over time (typically two to three years)?
See his book for a more complete guide on the topic.
3. Focus on growth and shareholder value
If you were turned down on your last budget request, you do have to accept that it might have been the right call. Every company is pushing for more shareholder value and that often means we need to accomplish more with less. Next time, reinforce your thinking by asking questions like:
If I was CFO, would I care as much about this project as I do now? Why or why not?
What other projects are we currently investing in? How does my project measure up?
Why is this a critical investment for our company now? How can I show that?
Business Acumen is LEARNABLE
When we do understand the broad picture, we’re more influential, credible, focused, and we can drive growth. The good news is, that’s all learnable. Invest in your business acumen - your career (and your organization) will thank you.
What else could be useful in gaining influence and gaining a seat at the table? I’m eager to hear.
Author:
Cam Crockett, Director of Business Development - Acumen Learning
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