A survey of 77 "matching pairs" of CEOs and HR Directors in UK companies has revealed that the former are not convinced that the latter are delivering the goods on the most important HR issues.
The CEOs and HR Directors of 77 organisations, with over 1,000 employees, were questioned by Deloitte and Touche on the role of HR in the workplace. Both were asked about the issues they regard as crucial to the success of their organisation, the role of the HR Director, the skills of their senior teams and the way in which they measure the success of HR.
The survey reveals that while 63 per cent of CEOs believe that their HR function is good at delivering the basics, only 22 per cent feel it is very effective at meeting what CEOs perceive should be HR's top priorities. Ands only 7 per cent of the pairs of CEOs and HRDs identified the same area in which they thought HR needed to improve the most.
CEOs have little doubt about the importance of HR policies. When asked to rank factors that would drive the future success of the business, CEOs consider maximising the investment in people or ROI to be as important as having an effective overall strategy and more important than developing new or improved products and services.
But while CEOs and HR Directors broadly agree on their organisational priorities, choosing the same top 10 issues, they rank them differently. CEOs feel that while HR is good at delivering the basic processes such as compliance and payroll, they are failing companies in what they believe should be HR's top priorities.
Effective internal communication top the CEO's list. But HR views this as their fifth most important priority. As a result, only 22 per cent of CEOs believe that HR is very effective at delivering this.
Second on the CEO list of priorities is getting Return on Investment (ROI). But only one in five of the CEOs polled thought that HR was effective at maximising ROI.
Other key areas in which CEOs believe their HR Departments are not delivering benefits to the bottom line include maximising the return on investment in people, delivering cost effective value-added HR services and the application and use of HR technology.
There is either disagreement or confusion over who has responsibility for operating internal communications within the organisation. Although both CEOs and HR Directors agree that this area is a key priority for the business, at least 55 per cent do not agree on who is primarily responsible for this area.
HR Directors are also critical of their performance. Their main priorities were employee relations, recruiting talent and getting the basics right. Just over half believed they were very effective at getting the basics right with 47 per cent thinking they are very strong at employee relations. Only 23 per cent believed that HR was very effective at retaining talent.
"If you consider that HR is about aligning people strategies with business strategies, then we need to understand from those who are responsible for the business strategy - chief executives - what their people priorities are," says Brett Walsh, UK Head of Human Capital at Deloitte & Touche.
"CEOs and HR Directors both believe HR is not effectively delivering where the CEO's needs it most. One reason for this could be the difference in opinion on what the role of the HR Director should be. HR Directors must become more in tune with the CEO's people and cultural aspirations if they are to be seen as strategically supporting the needs of the business."