By positioning themselves as enterprise-wide leaders, HR practitioners can help businesses align their strategic growth agendas with their cultures, day-to-day behaviours and the activities that drive them.

There has never been a more crucial time for HR practitioners to demonstrate the value of their leadership and for that leadership to be enabled and valued.

To achieve this, they need to set themselves up to have a meaningful impact. This requires HR leaders to position themselves as business leaders first and foremost, meaning they can close the gap between strategy and culture by investing time in understanding their business’s economic drivers, and developing a high degree of courage to challenge when this is not optimised.

While many HR executives are already operating with this mindset, the spotlight on HR in the years leading up to and following the pandemic has been intense – and many were not fully prepared for such scrutiny.

Today, business leaders are turning to HR for guidance in shaping and leading a workforce that is more complex and rich with opportunity than ever before. However, the greatest challenge slowing businesses down right now is their struggle to respond effectively to the sheer volume of change. 

Too often, leaders merely tinker at the margins and apply quick fixes, which adds to the complexity of the change. But with shareholders applying more pressure and market volatility on the rise, businesses are seeking new avenues for growth while modernising their infrastructure and operating models, and that requires a transformational approach.

“The shift from functional to enterprise leadership isn’t unique to HR; all business unit leaders need to see themselves this way.”

This means People and Culture leaders are required to increase the frequency with which they adjust organisational strategies and the leadership capabilities required to evolve the culture to support the execution of strategy. 

As a result, HR practitioners have a new vantage point. They need to ensure the leadership team – and indeed, the whole business – has the ability to join the dots between the strategic agenda and the business’s ability to deliver on it. 

That’s an incredibly challenging job, and, for emerging HR leaders in particular, it often requires a mindset shift. 

Here, we share some of the key shifts we think are necessary for these practitioners, based on our combined years of executive HR and business leadership experience and the conversations we have with senior HR leaders on a weekly basis.

Become a commercial leader

HR practitioners have long been aware of the importance of moving from functional to strategic roles. However, many are seeking guidance on how to achieve this.

Dexterity, resilience and adaptability are key skills for all HR leaders to develop. But the key skill, we think, is the development of a sharp commercial mind. This means being able to weigh in on strategic decisions, not just people decisions. 

This requires a reassessment of the progression pathways and professional development made available to our HR teams. 

Historically, we have developed ourselves as technical specialists, but in order to be effective HR leaders, we need a holistic set of complementary business skills – such as those outlined in AHRI’s HR Capability Framework – that culminate in deep commercial acumen. 

Then, with the bigger picture in mind and commercial language in practice, we can align the work of the HR function to enable the business strategy, rather than operating in an HR silo. That’s how HR creates immense value for a business.

The shift from functional to enterprise leadership isn’t unique to HR; all business unit leaders need to see themselves this way, and, in essence, act as an advisory board to their organisation’s CEO. 

This means being able to answer questions such as:

• Which products or services are the most profitable, and why?
• What are the main cost drivers affecting EBIT, and how can they be managed or reduced?
  How does the business’s pricing strategy impact profitability?
• Which parts of culture can drive the most economic value?
• What are the ways of working that are accelerating or inhibiting our growth?
• How can HR strategies contribute to reaching or lowering the break-even point?

Read HRM’s article ‘5 HR capabilities practitioners need to navigate the future of work’.

Hone your influencing skills

HR’s stakeholder management and influencing abilities must also be exceptionally sharp. 

Today, HR leaders are required to build relationships with a far more diverse and expansive set of stakeholders than ever before. They must understand the needs of customers, the board, shareholders and employees alike. 

Furthermore, they need to synthesise diverse information and transform these insights into strategies that align with all the organisation’s strategic drivers, and prioritise two or three that will add the most value.

From an influencing point of view, HR leaders should develop a deep sensitivity to the priorities of management, and build empathy for all stakeholders into each decision. 

Consider what’s driving them emotionally, rationally and politically. Then be curious about how each stakeholder is feeling about the change you’re proposing, and lead with respectful and influential language that’s beneficial from the receiver’s perspective. 

This could look like demonstrating insights into key business priorities for stakeholders through expert questioning or describing the consequences of not focusing on P&C initiatives in commercial language. Where we see things go wrong is when people influence by using positional power or in pursuit of their own functional agenda. This might work in the short term, but you’ll struggle to keep people committed and productive in the medium and long term.

Strong influence is grounded in a deep respect for the other party and creating a win-win situation that can stand the test of time. It’s also about constant course correction and admitting when you’re wrong. That’s how you gain and maintain people’s trust.

Signal to your professional community that your HR skills are in line with international benchmarks by becoming a Certified HR Practitioner. Check out the micro-credential options or go straight to the assessment stage. Enhance your HR career today.

Broaden your experience

Theory will take you so far, but practical experience is worth its weight in gold.

The HR leaders we’ve seen who succeed at adopting the mindsets and behaviours we’ve outlined are those who have taken lateral moves into HR; they’ve held different roles within the business to help them develop a well-rounded perspective of its different pain points and opportunities. 

However, this isn’t to suggest that those with pure HR backgrounds aren’t able to become commercial leaders within their businesses. These practitioners are well-placed to offer important people-centric perspectives, and they are more than capable of gaining the necessary skills to demonstrate enterprise-level leadership. 

They just have to be very intentional about skewing their professional development towards this and thinking about how they can deeply understand the operating rhythms of other business-critical units in their organisation.

It’s incredibly exciting to see this evolution of our profession. When HR leaders can pair their financial and commercial capabilities with their people expertise, influence and empathy, they are proving, once and for all, that they are indispensable strategic partners in driving growth and transformation. 

A longer version of this article was originally published in the October-November 2024 edition of HRM Magazine.

Kate Mason FCPHR is a co-CEO at Social Value and founder and CEO of Self Energy.
She has over 35 years’ experience in global and regional HR roles, including as Group Director of People and Culture at Coca Cola Amatil and Vice President, Group HR at Amcor.

Paul Kelly is a co-CEO at Social Value and founding CEO at the Channel Group. He is a strategic facilitator, executive coach and communication adviser to senior management and directors at listed companies and technology businesses.