CHROs are forging unprecedented relationships with CEOs and CFOs, according to Lancaster University’s Anthony Hesketh in the Harvard Business Review special report, “The Call for a More Strategic HR.” Hesketh calls these relationships “golden triangles”—triumvirates that fuse strategic, financial and people issues into business strategy.
In other words, HR has taken a huge step toward achieving a decades-old ambition: taking a seat at the strategy table.
That phrase, now so ubiquitous it has the ring of a punch line, is no joke to HR. The function’s leaders have long championed the notion that people (HR’s primary focus) are a strategic asset, not merely a business cost; attracting and developing people, therefore, are strategic imperatives that HR should have a hand in. While this line of reasoning makes perfect sense, members of the c-suite have continually questioned HR’s contribution to the strategy of attracting and developing people. (In fact, some HR professionals have raised this question as well. Thirty-year HR veteran, Carol Anderson, did so quite compellingly in her article, “What HR Needs to Do to Get a Seat at the Table.”) HR also has been criticized for its lack of business acumen and analytical skills—core competencies for anyone sitting at the strategy table.
As a result, HR has spent the past several years building the capacity to deliver reliable people data and analysis to the organization. One way it has done so is by constructing predictive talent models to identify, develop and retain high-performance individuals. These efforts clearly mirror the big data initiatives launched by CFOs, CMOs and other senior leaders who have successfully transformed the way their functions operate.
So, with HR reinventing itself and forging those precious golden triangles, all’s well. Right?
Not so fast …
Key Competencies for HR’s Success
It would be easy to assume that HR’s success at the strategy table hinges on its ability to serve as a workforce data hub for the rest of the organization. But it turns out that’s only part of what makes it successful in the golden triangle—and it’s not even the most important part.
According to Hesketh’s research, “the most important competency for HR success in the golden triangle is the ability to be well networked with other executives in the company. The CHROs who truly exert strategic influence do so outside of formal settings in conjunction with the organization’s movers and shakers.”
In addition, Hesketh’s research found that financial acumen is a crucial driver of HR’s credibility. “HR leaders in the golden triangle understand the financial implications of their ideas for the entire enterprise, not just their own function. The language of the boardroom is finance, and HR leaders have to be able to speak it,” he notes.
At the end of the day, there’s no denying that HR is making inroads on taking its place as a strategic function—and that HR leaders are raising their profile among the organization’s senior ranks. But providing reliable people data and analyses are just table stakes. To solidify their place in the golden triangle and to complete their function’s transformation, HR leaders must strengthen their peer networking and sharpen their financial acumen.
That’s a lot to achieve in addition to everything else on their plates. But then HR has already progressed light years from its humble beginnings. A few more critical steps are certainly within its reach.