The Role of HR as a Strategic Partner: Forming the G3

Role of HR
Topic(s): business strategy, human resources, leadership, strategic HR
Publication: Harvard Business Review
Article: People Before Strategy: A New Role for the CHRO
Authors: R. Charan, D. Barton, D. Carey
Reviewed by: Susan Rosengarten

What is the role of HR in the modern workplace? The world of work has changed a great deal over the last few decades, but there is one truth that continues to stand the test of time; people are a firm’s greatest asset. Human capital, or the knowledge and collective intelligence inherent in a company’s workforce, can be a businesses’ strongest competitive advantage, and also its greatest source of risk. It is incumbent upon CEOs and CHROs, or Chief Human Resources Officers, to work together to manage their firm’s people assets, and to unlock the potential in every employee. The authors of the current article suggest that organizational decision making can be enhanced through open dialogue and discussion among the “G3” or the CEO, the CFO, and the CHRO.

The CHRO has often been seen as an agent of implementation, rather than a decision-making and change partner. While many believe that it is up to CHROs to prove their worth and the value of their function to the business, the authors argue the contrary. They believe that it is the CEO’s responsibility to elevate and redefine the role of the CHRO, and that CHROs should perform three essential business activities: 1) “predicting outcomes,” 2) “diagnosing problems,” and 3) “prescribing actions on the people side that will add value to the business.”

 

PREDICTING OUTCOMES

The CHRO is uniquely positioned to give perspective on the required skills and capabilities of business-critical roles, and assess how incumbents in these positions are performing relative to expectations. Furthermore, she and the CFO should work together to evaluate whether KPIs (key performance indicators), budgets, and talent strategies are aligned to deliver desired business outcomes. A good CHRO can provide valuable insight about her company’s competitive landscape and some of the key changes in HR policies and procedures of rival firms which could impact her firm’s ability to attract and retain talent.

 

DIAGNOSING PROBLEMS

The CHRO’s deep understanding of her company’s employees allows her to offer valuable insight about the failings of a particular line of a business, and why a promising venture proved less successful than anticipated. It can be tempting for business leaders to write off company losses as a function of a declining economy, or as the result of unlucky circumstances. It’s a bit harder to take a critical eye to understand how individuals’ behavior and actions may have contributed to or exacerbated already difficult situations.

 

PRESCRIBING ACTIONS TO ADD VALUE

CHROs can and should make suggestions on how to tap into the underlying abilities of their workforce. They may choose to reassign key employees by moving them to a new department where their skills could be better leveraged, or where there is greater business demand for their expertise. CHROs can also add value by recommending new ways company leaders can bridge critical skills gaps, and by helping colleagues target areas of weakness and refine desirable strengths.

 

SUCCESS OF THE G3

If this triumvirate is to function as an effective team, the CEO needs to encourage regular discourse with the CFO and CHRO, and make G3 meetings a priority. The CEO, CFO, and CHRO should meet weekly to discuss concerns about internal conditions or changes in the external environment, and should meet monthly to discuss progress towards long-term goals and people challenges that may arise a year or two out.

By forming and formalizing G3 teams in their organizations, CEOs can make better and more informed business decisions.