After hearing Neil Roden’s very late admission that the function he headed up at RBS (Royal Bank of Scotland) was merely a support function it is time to finally put a few hoary old misconceptions about HR to rest.
First on that list is the simple fact that when we all talk about ‘HR’ most people forget that this is short for human resource management – HR is a management function. Second, managing an organisation’s human resources (or human capital if you prefer) is inherently and necessarily a strategic role. The reason RBS went bust was because a sizeable chunk of their bankers were not managed well enough to stop them creating huge bad debts. RBS’s strategic ambition to become the ‘most admired bank’ was not matched by an ability to get the best value from its human capital. If that isn’t the job of an HR director then I don’t know what is. For Roden, as with the HR directors of all the other banks that failed, if they somehow think this is not their job then they need to make room for those who do. Otherwise they are turning the clock back to the bad old days of the lowly, unprofessional personnel manager – often appointed because no other department would have them.
A support function like Roden’s involves recruitment, advising on contractual pay and conditions, dealing with the usual grievance and disciplinary issues and reacting to any changes happening in the business such as relocations, revised terms and conditions and the like. This is what passes for HR in the vast majority of organisations today but is just old-fashioned personnel administration by any other name, with all the severe limitations that entails. The world might have changed in many ways and the job titles too (e.g. talent manager) but a support function runs training courses – it doesn’t get the best value out of its talent.
Day-to-day maintenance and reacting to operational demands, such as filling vacancies and running courses (even in expensive, purpose-built business schools or corporate universities) is intrinsically low value work because it is so easy to replicate; as evidenced by the low salaries of personnel and training officers relative to other professions. Nevertheless, even basic tasks need to be managed well and constantly monitored for how efficiently and effectively they are carried out. This leads personnel administration teams to resort to the sort of number crunching promoted by PwC/Saratoga to show how quick or cheap their recruitment process is.
The key distinction between personnel admin and real HR is that real HR people know that their main priorities are getting the right people and ensuring they are performing to their full potential, adding as much value as possible. They know this presents them with a much more problematic set of issues but they are not stupid enough to be taken in by the sort of simplistic and misleading data used in PwC/Saratoga-type metrics.
The biggest problem of all though with an HR ‘director’ believing an organisation like RBS can operate in a global banking and finance system with only a personnel support function is the most obvious one – it failed miserably – because if you leave human capital management to personnel people, or even other senior, operational directors, it doesn’t happen. Fact.
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