At a reunion or when you meet your classmates, you start talking about your jobs, you ask the same question: “What do you do now?” Both of you may be in the field of,
- Human capital management
- Helping major companies select, retain
- We have embarked on a career path that others don’t quite understand.
You work in HR!
A career in human resources isn’t the typical destination of MBA. You’re supposed to be employed as strategy consultants or investment bankers or, in the true spirit of the degree, general managers.
You once had jobs like those, but not now.
It’s a work/life balance thing.
If you don’t have the stomach for ‘real’ business, if you can’t do, teach.
If you are so interested in helping people, why don’t you go into social work?
Well, the answer is simple—and you relish providing it. HR today sits smack-dab in the middle of the most compelling competitive battleground in business, where companies deploy and fight over that most valuable of resources—workforce talent.
Don’t laugh. You often share your healthy skepticism.
You, too, have become a bit cynical hearing companies grandly proclaim, “People are our greatest asset!” only to watch most of them show little true commitment to developing and leveraging those people’s abilities.
You are also aware of the less-than-flattering stereotypes of HR professionals – many traditional HR activities, such as benefits management, are increasingly being outsourced.
This scenario is changing. Staggering cost of finding and hiring top talent today highlights the need to devote more time and resources to developing and managing this greatest asset.
The stakes are becoming ever higher as,
- Human-capital-intensive services sector continues to grow
- Workers’ mobility increases
- Moving laterally becomes more attractive to some people than moving up
- Baby boomers vacate their corner offices, decreasing the supply of experienced managers
- Millennial generation brings new expectations to the workplace
In short, the long-held notion that HR would become a truly strategic function is finally being realized.
You might have therefore been puzzled that although almost every successful CEO who visited your business school classes declared the importance of attracting and developing talent—and many said that the 10% to 20% of their time spent on this was the most rewarding part of their jobs—you heard little about how to actually do it in practice.
Things are changing, though. As talent management becomes a make-or-break corporate competency, the HR function is responding with a shift from managing the monetary levers of human resources—compensation, benefits, and other expenses—to increasing the asset value of human capital, as measured by intangibles such as employee engagement.
A new kind of HR professional is emerging to manage this transformed function,
Someone who deeply understands not only talent-management processes but also an organization’s strategy and business model—
Someone who is responsible for, say, hiring and training marketing managers but who also knows how to put together an effective marketing plan.
You’ve seen the “New HR” in action.
True, your experience could be primarily with professional services firms. But such people-dependent businesses are at the cutting edge of talent management because they face some of the most daunting challenges in that area, including employee turnover rates that require some organizations to replenish virtually their entire ranks every five years.
In business school, you were trained to seek out underappreciated investment opportunities and to create value in surprising places.
Your peers were searching for bargains in private equity or at hedge funds, though, you see the deepest discounts in the complex task of identifying, attracting, developing, and deploying people.
You also see an undervalued and underpriced asset in the HR function itself, one that is poised to appreciate significantly.
Like the smart value investors you learned to be in business school, you wanted to get in early.
Oh, one other thing: You’re having a great time.
You’ll continue mulling over the possibilities for the next few days, weighing both macro issues (what’s right for the company?) and individuals’ development needs (what’s the right way to give that young private equity expert needed experience in the financing business?).
Action-learning projects are among the numerous leadership-enhancement programs for senior executives that are used to simultaneously meet individual development and overall business goals.
Not all the initiatives achieve this perfect blend, of course, but several have yielded new lines of business and notable cost savings.
- Is your pipeline of seasoned managers sufficient in a particular function?
- Could a non-compensation-based reward system improve performance in another?
- Do your individual programs constitute a cohesive response to the firm’s overall human capital needs?
Your job is very cool. It mashes together psychology, organizational behavior, and hard-core finance.
Your job is one of the coolest I can imagine. It mashes together three things you find endlessly interesting—psychology, organizational behavior, and hard-core finance. What’s more, only a few years out of business school, you have seen decision making at the very highest levels at major firms.
Defining the New HR
At top-tier firms where you have witnessed innovative approaches to talent management in action—and your colleagues and former classmates have shared their experiences—you identified five characteristics that persist regardless of a company’s size, industry, location, and culture. Here’s how New HR is defined that’s emerging at these firms:
It looks like a business school.
Over the past decade or so, many MBA programs have shifted their focus from technical training to leadership training and their teaching methods from classroom lectures to teams of students actively grappling with real-world business cases. The same shift is occurring in corporate learning departments, with their new focus on action learning and on executive-led dialogue about business challenges facing the organization. The best-known proponent of this approach is General Electric, whose renowned Crotonville leadership center closely resembles a business school, including a Harvard-style case study classroom dubbed “The Pit.” (The influence also runs in the other direction: In 2006, J. Frank Brown, the former global leader for advisory services at PwC and a cofounder of Genesis Park, became dean of Insead, Europe’s largest business school.)
It has a P, not just an L.
Forward-looking companies treat HR as an engine for both savings and revenue, deliberately blurring the lines between business activity and people development. At Lehman Brothers, for example, a strategic university-relations function marries campus recruiting to business opportunity. Colleges and universities nationwide are treated as valued clients with which skilled managers should carefully cultivate relationships. Providing financial advice for a university’s endowment fund, partnering with the institution to bring promising research efforts to a wider marketplace, and recruiting students for jobs at Lehman are activities conceived as a single package rather than as disparate touch points to be placed in revenue and nonrevenue categories.
It hatches and harvests ideas.
Every company talks about innovation, but too few extend it beyond the R&D function. Ironically, HR, long perceived to lack innovation, can become both catalyst and facilitator of mechanisms that foster creativity across organizational boundaries. Like outside consultants’ services, action-learning projects generate potential solutions to real business problems, but with the added benefit of a project team that knows how to get things done internally. In another approach, Google promotes innovation by asking its workforce to adhere to its 70/20/10 rule. An employee is expected to spend 70% of her time on her own job, 20% on “continuous innovation” within that job, and 10% on “discontinuous innovation” in any area she deems productive.
It makes big places smaller.
HR is poised to become the Facebook of the modern corporation. Many knowledge-management initiatives have failed because employees weren’t inspired to use them. Yet the rise of social-networking sites points to a widespread desire to connect with others who share your goals and interests. HR is uniquely positioned to connect people—and therefore knowledge, expertise, and mentorship possibilities—across an organization. For instance, leadership-development program alumni can participate in annual reunions hosted by a firm’s top brass and serve as advisers to current program students. Follow-ups such as these—and the programs themselves—help build networks of people from disparate parts of the organization and with vastly different areas of expertise.
It focuses on the upside.
HR often gets trapped in a policing role, mediating employee grievances, monitoring compliance with employment laws, and enforcing codes of conduct. What’s more, the function often has seen its mission as one of helping workers overcome deficiencies that hinder their performance. Without ignoring these tasks, the New HR concentrates on the positive. How can we enhance revenue by doing more to engage employees? Instead of trying to “fix” a chronic employee weakness, how can we tailor a role that matches and capitalizes on strengths? For example, rather than belabor, in performance review after performance review, a talented marketing executive’s lack of deep finance skills, seek to leverage that person’s creative talents in a broader marketing role—one that helps the company expand in key overseas markets.• • •
So a few Harvard MBAs chose an atypical career path: Who really cares? We have certainly wondered whether we, our companies, and our colleagues are isolated examples. We have considered the possibility that the New HR may be a model championed by only a handful of people that will take root at just a few unusual organizations with investment dollars to spare.
It would be presumptuous for us, as relative newcomers to the field, to offer definitive pronouncements on it. Yet the more we learn from our peers, the more we become convinced that a sea change is occurring. We see that firms with the best track records of attracting and retaining top people are those with the most innovative talent-management programs—not only the firms where we’ve worked but also companies like McKinsey and Fidelity (which, it’s worth noting, also hired people from our business school class to work in HR).
By necessity and design, these companies are ahead of the curve. That’s because they are in the most talent-intensive fields, and they know they must attract top people or fail. Yet as more and more businesses become services-focused and HR-intensive, this model may soon become the standard across industries. What an enlightened consulting or financial services firm does today, most companies will need to do tomorrow.
If we, as two recent MBAs, can get in early on a field poised to take off—and spend 100% of our time on the activity that CEOs told us was the most rewarding 10% to 20% of their jobs—why wouldn’t we?
My thoughts in writing above, are inspired by the write from HBR issue of yr 2008, published in NY.