A new role for human resources

By Chandran Nair
Ethical Corporation

The current global recession presents an excellent opportunity to review the conventional role that human resource professionals have played within large organisations.

After all it is the recklessness of individuals within organisations that contributed to the mess we find ourselves in.

It is therefore not unfair to suggest that the management of human resources within companies was lacking. What role did HR play in contributing to the current crisis?

Certainly it is not the role of HR to police the behaviour of executives. However, a key part of their role must be in educating and supporting current and future leaders to think in ways that will prevent dangerously unscrupulous behaviour.

A radical rethink is needed to move HR away from merely being paper pushers and at best hand-maidens of CEOs with peculiar views of people, talent, ethics and diversity.

Typically in large companies a dynamic but not always productive tension exists between HR and the various business units around the allocation of resources and dare we say, cultivating real ethical decision-making frameworks.

Low standing

However, in all but the most enlightened companies HR plays a weak role in nurturing internal culture, is not deeply involved in integrating values into key positions and merely supports more superficial efforts to communicate general notions of business ethics.

It is the rare HR person who dares speak honestly on serious ethical challenges internally. HR must be more outspoken and influential.

Now is the time for HR to step to the forefront and play a vital management and leadership role in companies.

As the crisis in corporate values continues and new corporate governance protocol are yet to be written, HR directors would be well positioned to facilitate a convergence of certain key business imperatives if given the mandate to do so.

These imperatives include business improvement, ethical leadership, greater internal transparency, corporate responsibility, talent development and employee engagement.

In many companies HR has long clamoured, in vain, to be seen as a partner to the various business units and this can be a new substantial area in which it can add value.

Boardroom influence

The starting point would be for companies to have a counter-balancing voice at the board level to influence decisions which may be made on weak ethical foundations.

The public is now well aware of the moral hazards associated with a committee designing compensation packages which is teeming with insiders.

An opportunity now is for a newly empowered HR head to be involved in discussions on remuneration and other issues at the most senior levels of the company. This person would act as an independent moral compass promoting transparency on critical decisions.

As the fallout continues it is becoming clear that corporate leaders of the recent past were sorely ill equipped to lead their companies in a way which protects the interests of the company employees and society.

Leadership development must regain a focus on the nuances of human interactions, awareness of current social issues and genuine ethical decision making, rather than relying on textbook definitions which are too often frozen in time.

If given the priority to do so, renewed HR leadership can also encourage ideas which add value to society and are not motivated purely by profit at any costs.

Given their close contact with various business units and focus on developing people, HR has the potential to do this in a more integrated way than corporate responsibility, which has tended to be isolated and communications-driven.

Skills development

As part of a new mandate for HR, employee engagement can go beyond typical volunteerism or generic team building to actually tap into employee skills, talents and interests, aligning the activities with strategic opportunities for the company.

Companies can see staff as a rich source of insight on persistent company challenges. In a cross-functional setting, these insights can go beyond what any single business unit leader can accomplish on their own.

Companies can no longer afford dysfunctional systems of ethical leadership or weak and inconsequential HR departments.

In the absence of a head of ethics, the HR director of the future can promote a culture rooted in greater social awareness, help to redesign more rational incentive schemes and act as a counterpoint to the conventional approach of profit at all costs.

Company leaders must ensure that fear brought on by the current economic crisis does not stymie the evolution of HR departments and their potential to lead the creation of a new corporate framework that drives both productivity and ethics.

Instead, regulators and shareholders must demand that such an HR watchdog be included at the board level and play a more significant role in driving a new corporate culture.

Chandran Nair is the founder and CEO of the Global Institute For Tomorrow.