Face to face: Andrew Mackmurdie – Is HR missing the boat?

Human resource managers must become more strategic and business savvy to remain relevant to modern organisations. That is the unburnished opinion of Andrew Mackmurdie of global management consultancy Hay Group.
To gain or re-gain the “strategic ear” of enterprise leaders, HR managers must smarten up their use of the technologies available and make more meaningful connections between people, jobs, pay and performance.
Historically, HR did most of the work around organisational structures and work function. Now, according to Mackmurdie, the majority of these initiatives appear to be coming from the chief executive’s office. “HR must get back to being part of the genuinely strategic discussions held in C [senior management] suites.”
HR managers have, it seems, lost their way and become preoccupied with gazing at new practices, rather than making better use of tools already available to help them see things more strategically.
The profession, of course, views the future through somewhat rosier lens. Surveys of HR managers and professionals consistently predict that more of their number will occupy seats at the board table or in the CE’s office. “Don’t be surprised if an HR executive becomes CEO of Fortune 100 company,” said panel of top shelf American HR practitioners last year.
Mackmurdie, on the other hand, thinks that if HR is to remain relevant in the debate around strategy, structures, jobs and people it must make more effective use of current work measurement technology. “In the majority of NZ organisations, companies use their work measurement and job evaluation tools solely to establish or confirm employee remuneration levels. We are seeing resurgence in the use of these evaluation tools in other countries, but not just in the remuneration space,” he adds.
A recent global survey of top executives by The Economist Intelligence Unit found that managing company’s talent pool is “now too important” to be left to the HR department alone. It has instead become “the responsibility of the chief executive”. It is conclusion with which Mackmurdie partially agrees. “There’s no doubt chief executives are now taking great deal more interest in people,” he says. “Consequently they expect higher degree of output, professionalism and business savvy from HR managers.”
HR managers must “look at things from business perspective and use integrated tools” to maximise what they get from their investment. “There is greater global recognition that the key organisational differentiator in today’s world is the people it employs. The war for talent is real and worldwide,” says Mackmurdie. “Organisations that manage and grow their talent more efficiently and cost effectively will differentiate themselves from others fishing in the same under-populated talent pool.”
HR, it seems, is too often involved in an organisation’s “nice-to-do” things and unfortunately appears to be left out of the real business-related decisions. That should and could change if HR managers took different approach, according to Mackmurdie. “They must understand the consequences of the new reality that CEs and boards are now more aware of the importance of people to the fortunes of their businesses.”
All the corporate leaders in The Economist study said that talent management was now their responsibility. third of them spent 30 to 50 percent of their working time on the task. This shift in emphasis is reflection of both the need to employ and develop good people and, the shortage of available talent.
There is view that New Zealand employers are struggling with the paucity of good people but Mackmurdie thinks there is more talent about than is generally appreciated. “New Zealand has lot of talent but we don’t identify or challenge it early enough,” he says. “Some of our good performers are further down the organisation and don’t get promoted or acknowledged soon enough.”
New Zealand companies have traditionally been sceptical about using well-validated assessment tools to first identify and then develop and manage talented employees. This seems to be changing but change takes time. “This move is part of an evolving professionalism, driven by the war for talent,” he adds.
Overseas owned companies operating in New Zealand are taking the assessment, identification and development of people more seriously than locally owned enterprises. Kiwi companies are more reticent about using well-proven tools and methodologies to support their talent identification and development programmes, says Mackmurdie who worked for Hay Group for almost decade in India and the other Asian countries including China and Hong Kong.
Companies everywhere are, he says, trying to understand their future options. They need to identify what kinds of jobs and skills are required to take their organisations into the future. “They need to understand what sorts of people are needed to populate those jobs and identify who within their organisations can fill the roles.”
There are, according to Mackmurdie, four critical issues organisations must address to develop an integrated approach to their HR management. They must:
• measure work to identify how, where and why it is done
• align work to ensure it fits their strategy and structure
• manage the person/work fit by having the right people in the right job
• measure the value to the organisation of each individual work role.
HR managers should take more holistic look at the information they already have available about their employees. “They would be surprised by how much information they have when they bring the different data collected together,” he adds. “Companies increasingly need to know if they are getting the right return on their investment in human capital.”
As the human capital component becomes more expensive, more CEs view their people as an investment rather than cost. That is major shift in thinking, according to Mackmurdie where traditionally people have been seen as cost to the company as measured through the payroll. “When organisations look at people as an investment they begin to have different perception of the money spend in that area.”
New Zealand companies have generally been reluctant to invest in people assessment and evaluation tools, on talent development and talent retention. Our culture of short-term thinking probably impacts how many Kiwi companies view the role and relative importance of HR management.
That approach, in Mackmurdie’s opinion, must change. “Companies should start thinking about investment in people as an investment in the future. That may mean making different decisions on profit levels and taking longer view of things,” he offers, “but people are assets and should be treated as such.”
The change in C-suite thinking has impacted Hay Group’s strategic thinking too. The company is repositioning its job and people assessment tools from transactional to more transformative. It recently launched Spectrum, an integrated way of applying its measurement and assessment methodologies that connects people, jobs, pay and structure, so as to provide organisations with an understanding of the way in which they can be integrated and deliver value.
Whatever tools organisations opt for, there seems little doubt HR management must prove its relevance and earn its place at the genuinely strategic table or risk being replaced in the organisational hierarchy. M