Creating & Communicating HR’s value in the C-Suite

Webber Kerr’s President Adam Lloyd meets with Dana Smith of American Capital, a Human Resources executive who has built trusted and effective relationships with boards and executive management teams, in both multinational and domestic organizations. 

Throughout her career, Dana has successfully created cultural strategies that align with the execution of business initiatives, and as a result, she has won a recognized and depended-on voice in the C-suite. Dana currently leads Human Resources for American Capital’s domestic and European affiliates and has also provided consultation to its myriad of portfolio companies across many different industries. 

AL: Dana, even recently we hear a lot of HR’s value being questioned, going extinct, etc. You’ve been an exception to this, by not only creating real HR value but in communicating it to the top of the organization. It’s as if you’ve discovered some type of HR algorithm. How did this start for you? 

DS:   I’m not sure there is an HR algorithm.  If there were, someone would have surely patented it by now!  With automation being so prevalent, HR and other roles might be at risk of going away. But, systems ultimately cannot drive strategy, shape culture, or develop leaders.  There is still a real human element that transcends the mere “tactics” of HR.

I approach the work as a businessperson.  There are many entry points into the field of HR – none of them better or worse, just different.  Mine was a pure business background coming out of The Wharton School of the University of Pennsylvania.  Chief human resources officers or any members of a C-suite are there to help the business solve real problems.  My lens just happens to be that of human capital just as the Head of IT thinks in terms of “all things technology”.  I’m partnering with an organization to realize more of what it wants within the context of its strategy; it’s not about HR’s agenda in isolation.  Without people and the right talent approach, there is no business, and there is certainly no possibility for growth.

As far as communication is concerned, listening is a huge piece of that equation, articulating a point of view is where the value-add comes in, and remaining very open to considering and appreciating other viewpoints is essential for true collaboration.

AL: A Harvard Business Review executive assessment study showed that the CHRO’s traits aligned closest to CEO’s, amongst executive functions. Why do think more companies are not looking to the CHRO to be next in line to the CEO in their succession planning? What actions can HR executives take to change this?

DS:   It is probably because the HR executive needs to speak the language of the business and employ some economic parlance.  The CHRO should know how to read basic financial statements and understand financial implications of every action taken.  He or she should know how the business makes money and take as broad a view as possible.  The business is like a canvass, and HR strategies are simply the paintbrushes or tools that shape the landscape.

I’ve seen heads of HR become Chief Marketing Officers, or division Presidents, or CEOs.  Those individuals thought beyond their functions.  They sought to understand questions like “What is the story of the business?”  “Who are the stakeholders?”  “How are these constituencies in alignment or in conflict?”  “How are our products made or services sold?”  “Where can I contain cost or drive revenue?”  HR executives should look at an organization conceptually, apply design thinking, and remember that what constitutes the business are multifaceted people who want to bring out their best selves at work, whatever that looks like for them.  Then, CHROs need to execute on the business scorecard and be held accountable for business outcomes.

AL: Historically, HR is often thought of as reactively managing the soft, emotional side of the business; however, there is a lot of attention now to HR data, employee engagement and competitive hiring. Have you seen specific HR deliverables or initiatives that have consistently drawn interest from stakeholders? From your experience, where are CEOs finding the value in HR? 

DS:   Deloitte Consulting identified the top human capital trends for 2016.   I suspect many of these will carry into 2017.  Talent acquisition and retention remain key strategic imperatives.  And, then it’s a question of everything that falls in between like engagement and the employment experience.  Will that experience be congruent with the company’s values?  How will the employee speak about the company in the market?  Would the employee boomerang to you if he or she were to leave the organization?

In my view, it’s business initiatives that draw interest such as acquiring assets or people, transforming a business model, or taking a company public.  It’s things like helping the organization think about legacy and sustainability, the footprint it’s leaving in terms of social responsibility, how to enter new markets or divest of a business line and how to reinvest in its people or technology.

AL: In addition to creating business value, you’ve built trusted relationships at the top, probably the most important element in my opinion. When you enter a new company, how do you start forming and maintaining effective alignment between HR and executive management across functions?   

DS:  I work to build trust.  It’s a marathon, not a sprint.  Relationships are fundamental to any transaction or business dealing, and people want to trust the person sitting across from him or her at the table.  If there is no relationship, there is nothing. I say “people may as well hang up their hats and go home”.  I focus not only on what I am doing but how I am doing it.  If employees do not bring their authentic selves to work, people will see right through it.  

I work to honor my commitments and share information across the organization; so much of alignment is communication.  Too many companies work in silos. We need to enable each other to attain an optimal level of business performance and do that collectively.  I look at an organization systemically, while offering perspective on other people’s functions but not in a way that usurps their leadership.  Their expertise needs to be respected; there’s a reason they were chosen for their roles.

AL:  What advice would you give HR executives and departments that are looking for ways to increase HR’s value to their organization? And… what can CEOs do to help maximize the impact of HR? 

DS:  Understand what is on the mind of your CEO.  We live in a world of volatility, “certain uncertainty”, and activist investors.  CEOs struggle with how to be more purpose-driven, have more local market sensitivity, and balance short-term versus long-term results. 

CHROs can be a source of strength and a role model for other employees in times of change. They can understand culture and strategy and that the two do not have to be mutually exclusive. They can act as a barometer for where HR is going directionally from a macroeconomic perspective. For instance, we’re currently in a gig economy, and digital innovation is revolutionizing industries.

As HR executives, we should understand where the business finds itself in the economic cycle as well as in its own evolution and think about whether it’s time to be counterintuitive before a market rebounds or while others are exiting.  Acknowledge “one size does not fit all” – something that worked well at another company may not translate well because of unique nuances to a business.  Remember that while there are themes that can cut across a population, like millennials, there are still exceptions to everything at an individual level.

Meanwhile, CEOs can position the HR function for success, structurally from an organizational design standpoint.  The CFO and the CHRO can be placed on equal footing while CEOs can own and embrace the human capital strategy.  They hamper their organization’s success when HR is relegated to a second-class status or thought of as an administrative function.  The CEO can be a champion for the executive to realize full value. We are seeing a “sea change” on this issue.