Have you ever had your strategic options limited by a lack of organisational capabilities? Been unable to execute actions due to a lack of critical talent? Lost your best people and found it hard to hire good, affordable personnel? Led a merger and acquisition that failed to deliver on the synergies identified? Or, found it challenging to get your people to share information and collaborate?

For most leaders, the answer is “yes”.

In the talent management space, the most frequent complaint we receive from organisations about their Human Resource (HR) function is that “they simply don’t get it” – the ‘it’ in question being ‘the business’. The chief human resource officer may well understand the business, but that is often not true of the rest of his team, which is typically more focused on HR systems and processes.

HR personnel need to understand that the business of HR is the business. They need to know the organisation and the context in which it operates well enough to be a useful partner in conversations about strategic options. We call this being an effective ‘strategic positioner’.

This means HR leaders should be aware of the STEPED (social, technical, economic, political, environmental and demographic) factors that may affect the organisation’s ability to operate and win in the marketplace.

The STEPED model aims to help HR leaders identify and think through external trends that may impact their company, understand these trends’ business implications, and develop and prepare appropriate HR responses. In this way, HR can help an organisation reduce the negative impact of external trends and factors.

Conversely, if HR does not develop the skills set and processes to be effective strategic positioners, organisations can make costly mistakes.

A US manufacturer of semi-conductors was looking to build a new plant in China. The company established their new high-tech plant in an inland city where there were generous tax incentives and cheap land and labour.

Unfortunately, there was a lack of highly skilled technical experts. Eventually, the manufacturer was forced to hire expensive expatriates and pay high salaries to engineers from the very coastal cities they had discounted as potential sites for their plant. The shortage of required talent effectively negated the supposed cost savings of the inland location.

Our initial assumption upon hearing this story was that the US company simply had not carried out the STEPED analysis. We were equally bemused when a HR leader of a large, well-known Chinese company told us that her firm had made exactly the same mistake, for the same reasons.

Our conclusions were that the HR personnel in both firms either did not understand the implications of the business decision, had insufficient influence in the decision-making process, or were simply not part of the conversation on where to locate the new plant. In these cases, it is possible that HR personnel either did not engage with the management team and vocally express their fears, or did so but made an insufficient impression.

This illustrates the critical importance of HR leaders being effective ‘credible activists’. A credible activist is a trusted adviser to the business who has a point of view – and is not afraid of expressing it. These views may be unpopular – such as opposing plans to locate a new manufacturing plant in a second-tier city – but a HR department that can provide credible objections and suggest solutions is an organisational asset.

A credible activist can only be built over time. But a HR leader who understands the business and the context in which it operates, who has the trust and respect of his peers, and is proactive about solving challenges or mitigating risks, is a valuable asset to a leadership team.  

Asian HR leaders: challenges and opportunities

In a recent HR workshop in Singapore, a recently appointed Singaporean HR Vice President for a global firm talked about how she supported her business leaders. “I sit down with each of our firm’s business leaders every quarter and have them walk me through their sales pipeline or growth objectives,” revealed the HR VP. “I want to understand the business and what they need to do to achieve their objectives. I particularly look for where HR is either an obstacle that I need to fix or a potential enabler to add capability, or if I need to change how the company and HR are aligned.”

At first, business leaders were reluctant to spend time with her. “But over time, as I began to really understand the business and to speak their language, they began to see me as someone to bounce ideas off who could help them achieve their goals,” she affirmed.

HR leaders can work with and support subordinate functions and line partners, but they can also add value to an organisation’s executive body. For example, in leadership meetings, HR leaders can observe how people respond to upper management. “It is difficult for the CEO to watch everyone,” said the same HR VP, “but I can see who agrees, who is not engaged, or who is obviously resistant to what is being proposed. I always have time scheduled with the CEO after these meetings to debrief him on how different stakeholders appear to react to his message.”

Her comments made an impact on the other HR people in the workshop. Some looked confused and some were quite hostile, so much so that she apologised to the workshop leader for being a ‘disruptive influence’. “Not at all,” he replied, “you get it, it is they who do not.”  

How to develop Asian HR leaders

Most Asian HR leaders find being strategic positioners and credible activists the most challenging competencies to master. Business leaders have argued that cultural factors may mean Asian HR leaders are less proactive – an essential trait in credible activists to voice opinions, objections or suggestions. It is also true that the HR function is relatively immature in Asia, with major development only occurring within the last 30 years. However, there are ways to strengthen vital competencies in HR leaders.

As a leader, you can help by treating HR as high-potential talent to be developed, and ways to do so include:

1. Set high expectations.

Make it clear that you expect HR to be actively involved in and have an opinion on strategic business discussions and decisions. Almost any new strategy will demand new talent and capabilities; it is HR’s job to provide them.

2. Make sure HR is equipped to contribute.

In almost every organisation, HR is often the last function to invest in capability development – this needs to change. Invest in growing the business acumen of HR personnel by using simulations and experiential learning to explore how the business works, what matters and why.

3. Do for HR as HR does for the business.

Give HR personnel stretch assignments and rotations into line positions to give them an understanding of the business,  and rotate line managers into HR so that they understand how HR contributes. Portray a spell in HR as a good development opportunity, not a place to dump poor performers.

4. Help HR personnel identify and connect with role models.

Identify organisations you respect with strong, strategic HR leaders, and help HR personnel develop a mentoring relationship or a network of peers. Have your organisation sponsor a quarterly gathering of HR leaders to share ideas and network. It is inexpensive, and the information exchange can be invaluable.

Good leaders enable better HR

The best HR leaders would already be doing all of the above without you. But just as good HR leaders develop talent for the business, good leaders ensure that HR is developed more effectively. If HR is neglected, a potentially powerful multiplier is ignored. By integrating HR into the business outcomes of an organisation, leaders create valuable organisational assets that can support real-world deliverables.

This article was first published in HQ Asia (Print) Issue 06 (2013)