By Derek Parker    

Isolation and compartmentalisation is a critical problem for many human resources managers but a new book suggests the walls can be broken down by borrowing methods from other parts of the organisation.

“HR managers who are looking for ways to integrate their operations more firmly into the corporate structure as a means of adding strategic value do not need to reinvent the wheel,” says John Boudreau, author of Retooling HR and professor of management and organisation as well as research director at the Centre for Effective Organisations at the University of Southern California’s Marshall School of Business.

“Adopting and adapting the tools of other areas of the company not only gives HR a much broader perspective but establishes a common framework for communication and development.

“Many non-HR managers see HR as a soft discipline, but they recognise that it needs to be addressed, and they want to better understand both HR’s own professional tools as well as what improved HR management can do for them.”

Boudreau notes that the performance optimisation tools borrowed from engineering can be used to see how improved operations in one area affects the overall system. The methodology can also be used to determine where improvements will make the most difference, which helps in the allocation of training and recruitment efforts.

“There is a tendency . . . to think in terms of filling each and every job with the best possible person,” he says. “That sounds good in theory but is very seldom optimal in practice. Choice and focus is required. What you need is a means of showing where there can be the biggest overall return on a HR investment, and this approach can really help.”

There are also lessons to be learned from finance, especially by looking at competencies and skills as asset classes that can be strategically configured to protect against future risks.

“In fact, understanding risk is something that many HR managers need to do better and the finance section often has people who are risk specialists,” Boudreau notes. “HR managers tend to be risk-averse but that is not always the best approach. Sometimes, better overall results can be achieved by taking risks, even if it entails the possibility of below-average returns in some areas. The tools used in portfolio diversification, for instance, can inform the understanding of risk in HR management across the company as well.

“Most companies have a great deal of data about HR issues but there is often more data than there is capacity to draw the right lessons from it,” Boudreau says. “If you take some pages from the book used by inventory managers and operations engineers, HR managers can better manage turnover rates, hiring levels, and workplace shortages and surpluses. These are good tools for assessing the full costs and benefits of talent, especially in an era when talent quality makes or breaks an organisation.”

Integrating new tools into HR management would probably require additional training for HR managers and Boudreau suggests greater rotation of HR managers through an organisation would be critical.

He stresses the use of new methodological tools should not undermine the human focus of HR management. “Retooling does not mean dehumanising human resources,” he says. “A retooled HR world will still have great need for the humanity that is the hallmark of the profession.”

Retooling HR: Using Proven Business Tools to Make Better Decisions About Talent, by John W. Boudreau, Harvard Business Press, $55.

Article from The Australian, September 18, 2010.