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Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Thursday 25 Oct 2012
Time to stop implementing generic models as gap between what business wants from HR and what it gets widens

Time to stop implementing generic models as gap between what business wants from HR and what it gets widens

Few would argue that an effective HR practice can be a real source of competitive advantage to a company.  Acres of research have been produced showing a powerful relationship between good HR management, employee commitment, and business performance. 

Yet just as much research suggests that there is a gap—and, in all probability, a growing gap —between what most organisations would like their HR departments to deliver and what they actually get. A recent Economist Intelligence Unit / KPMG survey into the future of HR confirms this widening chasm. 

Dave Ulrich, one of the best-known HR experts, has described this credibility gap in simple terms. He sees HR as the function that “offers the greatest promise but consistently underperforms in reality.” 

That view appears to be supported by business leaders recently surveyed by KPMG – asked whether they were impressed with their HR teams, just 17% suggested they are currently doing a good job. The qualitative analysis is similar. 

Commenting on the role of HR within strategy creation, the CEO of a global retailer had the following to say: “When the marketing director comes to the executive board meetings he presents data on our consumers, and we are given enormous insight about their buying habits, their aspirations, their concerns, and their hopes. We have clear demographic data, and we can predict with real accuracy how patterns will evolve. But when HR presents information about our employees, it is less precise, less concise, less insightful, and less predictive.” 

Needless to say, attitudes like this do not cheer HR professionals. You only have to pick up an HR journal to see an editorial, letter, column, or feature article commenting on the lack of status or credibility of the HR profession. Articles such as “Why We Hate HR,” “What’s Wrong with HR?” and “Does HR Have a Future?” all point to a crisis of confidence and credibility. 

It does not have to be like this. But to make a difference, HR has to stop looking for and implementing generic models and best practices. The biggest indictment of the function is that HR functions are more similar to each other than they are different. Just about every big company has a variation on a theme of the Ulrich Model. 

This is the problem. If your business needs to compete through innovation, the HR function needs to be uniquely configured to enable and drive that innovation. If your business needs to achieve market leadership through a distinct customer experience, then that is the way the HR function needs to focus and configure itself. 

I look forward to a world where HR functions are unique to the strategic challenges and needs of competitive advantage for their business. That would be a world where the HR director is first among equals around the top table. It would be a world that is infinitely more interesting and rewarding for both HR and for business, because HR and the business would be one and the same. 

Robert Bolton, partner in KPMG Management Consulting and global lead of the firm's HR Centre of Excellence