CEO Perspectives

How HR can take on a bigger role in driving growth
Friday, February 1, 2013

Authored by : 

Multiple authors. Report sponsored by IBM and Oracle.
CEO Perspectives

About this report

CEO perspectives: How HR can take on a bigger role in driving growth is an Economist Intelligence Unit report, sponsored by IBM and Oracle. It investigates whether the HR function is forging a close and robust relationship with the CEO. It also explores the nature of these working relationships,how they have been affected by the economic downturn and how they vary across industries and regions.

The Economist Intelligence Unit bears sole responsibility for the content of this report. The findings do not necessarily reflect those of the sponsor.

The paper draws on two main sources for its research and findings:

  • A global survey—conducted in May 2012—of 235 C-level executives, 57% of whom are CEOs .The respondents are based in North America(47%), Western Europe (40%), Eastern Europe(8%) and the Middle East (4%); a total of 38 countries are represented. A wide range of industries is also represented, including financial services (15%), healthcare,pharmaceuticals & biotechnology (12%),professional services (12%), manufacturing(10%) and IT & technology (8%). Half of the companies are large, with over US $500m in annual revenues; the other half are small and mid-sized.
  • A series of in-depth interviews with senior executives from major companies and other experts listed below.

Lucy Dimes
CEO for the UK and Ireland, Alcatel-Lucent

Philippe Gas
CEO, Euro Disney

Dinesh Paliwal
CEO, Harman International

Zoe Yujnovich
CEO, Iron Ore of Canada

Paul Sparrow
Professor, Director of the Centre for Performance-LedHR, Lancaster University

Richard Beatty
Professor, Human Resource Management, Rutgers University

We would like to thank all interviewees and survey respondents for their time and insight.

The report was edited by Gilda Stahl.

Introduction

Two dominant trends are potentially reshaping the role of the HR function in the corporate world. The first relates to the rapid growth of the knowledge economy. In this environment, a committed, appropriately skilled and prudently deployed workforce is critical in order to develop new products and outstrip the competition.

Second, many administrative functions that were formerly handled by HR departments, such as payroll and pensions, have now been farmed out to third parties. Indeed, research reveals that more than two-thirds of companies outsource a portion of their HR functions.

The HR function has thus been presented with an opportunity. Unburdened by some of their former responsibilities, HR specialists have a chance to transform their role, exploiting their image as experts in people to place themselves at the heart of the debate on a company’s strategic direction.

An extensive survey conducted by the Economist Intelligence Unit, sponsored by Oracle and IBM, confirmed that those at the pinnacle of the corporate world—chief executives—are very concerned about the potential negative impact of certain people issues, if they are not handled properly. A significant proportion of CEOs polled believe in the ability of their head of HR to help the company to overcome these challenges. However, although the HR function is believed to perform well within its own parameters, some doubts remain about its commercial understanding of the wider business. This indicates that heads of HR have not completed their transition from administrator to strategic partner in the eyes of the CEO.

However, heads of HR already may have a platform from which to penetrate the strategy sphere. They often are indispensable to the CEO as a sounding board, and if that atmosphere of goodwill and trust could be fostered, it could culminate in greater strategic involvement for the HR function.

For the full content with illustrations, click on one of the links below to download the article or view it online.

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