Five Big HR Mistakes

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Author(s): Mccarthy, Joe; King, Marsha

Start leveraging your team and talent.

EVERY COMPANY HAS A CHOICE ON how it leverages its HR function. For example, picture two firms: Alpha Corp and Zed Corp.

Alpha Corp's CEO has a broad perspective on the value HR can deliver. She recognizes HR as a strategic partner and expects HR to participate on a range of issues, including acquisitions, new market entry, and new products. HR reports to the CEO and is accountable for the same high standards of performance as the CFO or Chief Marketing Officer.

At Zed Corp, the perception is different. Here, the CEO holds a more limited view of HR and its impact. So, the HR mandates at Zed Corp are to cut costs, focus on transactions, enforce policies, and plan company picnics. Zed Corp doesn't see HR as a partner or player in the business, which is why it's given its marching orders after decisions are made.

If these two fictitious companies compete in the same marketplace, which one will receive more investment dollars and talent? Zed Corp.

Five Big Mistakes

Today, executive leaders need to focus on the potential contributions of their colleagues and avoid making one or more of five big mistakes:

Mistake 1: Underleverage HR's power. Leverage is defined as lifting power, a force, a strength. HR can be a source of power. Given the opportunity, these professionals are trained to drive a point of view on the future and offer a perspective on how to get there. HR departments are most effective when they are positioned by the CEO for involvement from the outset in the dialogue and debate of the business strategy. When leaders underleverage the HR function, it is obvious by the low expectations set for the department, and by management's inability to look beyond HR's traditional personnel and policy role.

This perspective dismisses the value of HR, leaving the department with limited influence and a narrow strategic focus.

Mistake 2: Under-resource the HR department. In many companies, HR suffers from its identity as a cost center. When viewed as a source of investment in the future growth and profitability of the business, HR's access to resources is very different. Having resources can make or break HR's contribution to the bottom line. Under-resourcing the function blocks the advancement of HR as a core business function. Whether or not HR has a voice at the executive table is one revealing indicator of the value of the role HR plays in the company. When the HR director reports to a COO or CFO, the company probably perceives and treats HR with more of a budgetary or cost-oriented mindset.

In contrast, an HR director who reports directly to the CEO is often regarded as an important contributor to the company's profitability.

Mistake 3: Under-develop HR talent. The tendency to under- develop begins when filling top HR positions isn't given the same attention as hiring a CFO. Until a company recruits high-caliber executives to strengthen HR, no major payoff can be expected. One key indicator is how involved the CEO is in the hiring process. HR is often viewed as a dumping ground for talent no one knows how to channel. Individuals who are seen as "good with people" or those "seeking a softer role" tend to populate the department. Companies that put their C-rated staff members in HR are almost guaranteed D-rated results.

This thinking denies HR what it needs to gain strength: great agents of change--people who can turn-around old HR stereotypes.

Mistake 4: Underutilize HR's capabilities. Underutilizing the skills and talents of HR is common. This happens when people, hired for HR because of an impressive skill or notable experience, can't demonstrate their competencies at the organizational level.

For example, consider a company that hires a highly-skilled person yet, is not ready to capitalize on this person's skill. So, the situation soon goes awry. The company tries to remedy this by assigning the new hire to a special project. But this over-skilled, under-utilized person soon becomes disenchanted.

Mistake 5: Undermine HR's potential. To appear politically correct, many leaders invite HR to the table to signify a partnering relationship, but partnering requires more than just sitting together--there must be visible signs of a people strategy. When companies pay only lip service to their "people" agenda, HR initiatives are undermined, resulting in dissatisfaction. Most companies view HR from a myopic perspective that represents tunnel vision with an eye only for minimizing risk, not maximizing gain.

A Better Path

Consider the road less traveled or an organization that:

* Delivers talent. Hires HR leaders who understand the business and have in-depth HR experience.

* Creates impact. Crafts a relevant and compelling strategy that supports the delivery of business goals.

* Manages culture. Recognizes the power in guiding an organization through its life-cycle and in managing the culture shift in a positive manner.

When leaders understand these three areas of importance, they are more likely to make the shift to a more effective workforce. The process begins with recognizing where the company is, where it wants to go and then building a game plan to close the gap.

Identify which of these mistakes you may have made, or may be about to make, and plan to rectify them. The benefits that flow from a truly leveraged HR team will create a powerful case for change--change that will benefit the bottom line and further engage the HR team.

ACTION: Avoid making these mistakes.

Joe McCarthy is VP of HR at Capital One; Marsha King is Director of HR at Capital One, offering a range of banking, consumer lending, and auto finance products. http://www.capitalone.com/

© Copyright Executive Excellence Publishing Apr 2006

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