HC vs. HR - What's the Difference & Who's in the C Suite?

So after many conversations at SHRM10, Twitter, HCI and other venues, I've decided to write a post about my views on the differences between human capital management (HCM) and human resources (HR).  I think there are many different debates on which does what and how a HC/HR organization should be designed.  Considering I'm neck deep in the design and implementation of this now, I thought I'd share some of my views and rationale on the topic.

Fundamentally, I see human capital and HR as two very different functions. My organization is a human capital organization, first and foremost.  My background is primarily from business mangement, with strong knowledge in a range of HR and human capital functional areas.  As the Chief Human Capital Officer for a joint venture, and as the VP of Human Capital for a consulting practice, my role is one in the same.  My focus is to ensure that our People Strategy Aligns with the Business Strategy.

Under the HC umbrella I have four key areas:  Recruitment, Talent Management, Human Resources, and Workforce Planning.   The reason I divided it up this way is that each of these areas has unique skill sets and goals.  Recruiting includes sourcing, vetting and screening candidates, assessments, interviewing, and selection.  Our Talent Management group includes several subsets: onboarding, training, performance management, retention, etc.  HR includes all of the transactional activities associated with our people (I9s, FMLA, benefits, etc.).  Workforce Planning pulls all of this full circle so that we're looking at the metrics to report the "as-is state" plus predict future state activities. 

All of those areas roll up to help strategically create a gameplan that aligns our people with the business strategy.

May people are asking questions about why HR doesn't have a seat in the C suite.  My simple answer is that HR shouldn't - it's one transactional piece in the HC arena.  Human Capital should be in the C suite.  This doesn't mean, however, that some heads of HR don't have what it takes to be in the C suite.  What I'm suggesting is simply this...  someone who has only been heading up transactional HR activities needs to rebrand themselves to show a broader depth of knowledge, and strategic ability, to look at more than the HR transactions happening in an organization.  This rebranding takes the form of becoming a true Human Capital practitioner - with a strong focus on business principles and concepts.  Successful CHCOs/Chief People Officers, etc. have a strong understanding of the business and a solid understanding of all of the various components of human capital - well beyond just HR.

Personally, I've also found that great HR Directors are rock stars at process oriented procedures and fact finding (data and details).  I greatly value these people because they provide data and process-based structure.  The nature of that kind of work is not always conducive to the extremely strategic and entrepreneurial nature of CHCO/CPO work. 

For all of these reasons, and a few others, I'm not a proponent of the head of HR being in the C suite.  It is the true Human Capital Officer who serves the strategic needs of the business with a strong team of recruiters, talent managers, HR managers and workforce planners behind them.

Comments

[book report]

I guess different people can understand these things in different ways.

[Stuart Shaw]

Hi Amy - From a UK perspective, I can honestly say we lag behind you guys. Human Capital, though now an old concept, is actually in some quarters judged on a par with web 2 concepts like crowdsourcing (though that's got a long history too). HR has been told to do a number of things at once recently, particularly get Web 2 and financially savvy. It's also been told to live with a shrinking budget. It's in a fire fight, and its new ways of thinking and doing things bandwidth is often non existent. I actually just wrote a piece http://www.hpa-group.com/blog/item/118-boldly-go-where-no-hr-has-gone-before emphasising how transitioning from HR to HC would give it a new lease of life, but your insightful piece gives me pause. Can HR become HC, or should we not even want or expect them too? In your understanding, HR has a place, lower in the food chain, but valuable if it sticks to a narrower focus. The problem I see here is that HR is currently doing and in many cases failing on the new HC stuff. They're wearing too many hats perhaps, or being expected too. Maybe this message is the one they need to carry to board?

[Amy Smith]

Hi Joe - so you can see by my post that I'm paying a lot of attention to Kolbe strengths with regards to these positions :) Yes, I see the HR function as a follow through/fact finder role and CHCO/CPO roles as more QuickStart/Fact Finder.

Jeff - It gets really tricky when you have a small org with, let's say, one person running tactical HR and the leadership expectation that the individual also provides CHCO/CPO-level functions too. It's not impossible but in my opinion a very, very hard role to fill. My guess is that individual is going to lack the energy to do both well because they are two very different skill sets.

[Jeff Williams]

I like what you have written here. So your organization has HR as a subset of HC. I get that. What is your opinion of organizations (large or small) that have all components under an HR umbrella? Does it become a matter of semantics? Or do those organizations lose focus with the various components? You got me thinking again. I like it!

[Joe Williams]

Very interesting post, Amy...enjoyed it. I'm drawn to the distinctions you make between human capital and human resources. It makes sense to me that transactional-based HR would be a good thriving ground for those more oriented toward fact finding and follow thru; what about the broader human capital role? More quick start?