Ram Charan recently wrote an HBR article which has sparked a lot of debate. It's title and premise, is It's Time to Split HR into HR-A (for administration) and HR-LO (for leadership and organisation). Charan's criticism of the unified HR organisation is:
“Most [Chief Human Resource Officers] are process-oriented generalists who have expertise in personnel benefits, compensation, and labor relations. They are focused on internal matters such as engagement, empowerment, and managing cultural issues. What they can’t do very well is relate HR to real-world business needs. They don’t know how key decisions are made, and they have great difficulty analyzing why people—or whole parts of the organization—aren’t meeting the business’s performance goals.”
It's true that a career in HR often starts in a generalist role, and that in some cases their business and strategy experience doesn't grow in line with their seniority. The crack in Charan's logic, however, is apparent in his comparison of CHROs to CFOs:
“[CEOs] would like to be able to use their chief human resource officers (CHROs) the way they use their CFOs—as sounding boards and trusted partners”
Nobody enters their career as a CFO equipped with the knowledge and means to "be strategic" - it's a competency that grows with experience, not qualifications (though the right education equips you with some of the tools and frameworks). So why is it that CFOs are seen as trusted advisors, and - at least to Charan - CHROs aren't? Nobody is advocating for Finance to split into administrative and strategy arms, because strategy without execution is meaningless, and effective strategy can't be set without deep domain expertise.
How finance develops skills in strategy
Finance professionals on an upwards career trajectory are invited to contribute to strategic discussions. The degree to which they can add value grows over time. How is it that Finance professionals learn "how key decisions are made"? They're there. How is it that Finance professionals can relate "to real world business needs"? They're constantly engaged in conversations about those needs at senior levels of the organisation.
Those HR Professionals who aren't interested in how their work can contribute to the top and bottom-line of an organisation will never be able to be effective CHROs - but they're in the minority. It's incumbent on HR to equip themselves with the knowledge, methods, and frameworks that will allow them to be strategic - but it's also incumbent on the leaders of organisations to enable them to use these tools.
