Maybe It's Time for the Divorce

4/27/12

John Boudreau and Pete Ramstad suggested a few years ago that, like finance and accounting or marketing and sales, the future of HR would see a separation of the function into two separate functions: one would be the strategic aspects of HR and the other would be the administrative aspects. At a recent meeting of CHROs, I began thinking that maybe it's time for the divorce.

One aspect of the discussion was the difficulty the field of HR has in attracting the top talent. A CHRO noted that the traditional HR role (e.g., employee relations working through a service center) has neither the pay nor the prestige of a top notch finance or strategy job, and thus rational students will choose the latter career over the former.

On the other hand, another part of the conversation revolved around how many CEOs are paying consulting firms incredible amounts of money to help them identify the organization design, architecture, role definition, talent, etc. necessary to create the capability to execute strategy. However, all of that expertise can and should lie within the "strategic" part of the HR structure.

In other words, the administrative aspect of HR serves as an obstacle to attracting the best and brightest, and it also colors how CEO's view HR. The sooner the strategic aspect of the HR function is divorced from the administrative component, the sooner those problems will be solved. The administrative side will attract and pay people like many outsource providers of basic HR services. The strategic side will be freed to compete for people with the McKinsey's and Booz, Allen and Hamilton's of the world with jobs of equal size, scope, and compensation. This new organization will be free to focus on building organizational capability to successfully execute strategy.

If this happens, perhaps the CHRO of the future sheds all responsibility for the administrative aspect of HR and transforms the role into a "Chief Capability Officer." So maybe the divorce could solve two problems: Attract better people to the profession while simultaneously build the credibility of HR and the role of the CHRO.