[Excerpt] The result of this missing ingredient is the basic reason for the variability that exists within the profession. In fact, a lot of business leaders do not clearly understand what HR is responsible or accountable for. Many are quick to relegate HR to social initiatives planning (e.g., United Way drives, company picnics), missing the value the function can provide to the business. In this paper I seek to address these issues by suggesting a four-factor framework for running the HR function like a business: (1) understanding the business HR is supporting, (2) developing a basic operating philosophy, (3) determining which HR products and services should be linked directly to business success, and (4) operating HR as a business

Fischer, Kurt R.

English

DigitalCommons@ILR

Cornell University ILR School 
DigitalCommons@ILR 
Cornell HR Review 
3-17-2010 
The Business of Human Resources 
Kurt R. Fischer 
Follow this and additional works at: https://digitalcommons.ilr.cornell.edu/chrr 
Thank you for downloading an article from DigitalCommons@ILR. 
Support this valuable resource today! 
This Article is brought to you for free and open access by DigitalCommons@ILR. It has been accepted for inclusion 
in Cornell HR Review by an authorized administrator of DigitalCommons@ILR. For more information, please contact 
catherwood-dig@cornell.edu. 
If you have a disability and are having trouble accessing information on this website or need materials in an 
alternate format, contact web-accessibility@cornell.edu for assistance. 
The Business of Human Resources 
Abstract 
[Excerpt] The result of this missing ingredient is the basic reason for the variability that exists within the 
profession. In fact, a lot of business leaders do not clearly understand what HR is responsible or 
accountable for. Many are quick to relegate HR to social initiatives planning (e.g., United Way drives, 
company picnics), missing the value the function can provide to the business. In this paper I seek to 
address these issues by suggesting a four-factor framework for running the HR function like a business: 
(1) understanding the business HR is supporting, (2) developing a basic operating philosophy, (3) 
determining which HR products and services should be linked directly to business success, and (4) 
operating HR as a business. 
Keywords 
human resources, decision science 
Comments 
Suggested Citation 
Fischer, K. R. (2010, March 17).The business of human resources. Cornell HR Review. Retrieved [insert 
date] from Cornell University, ILR School site: http://digitalcommons.ilr.cornell.edu/chrr/12 
Required Publisher Statement 
Copyright by the Cornell HR Review. This article is reproduced here by special permission from the 
publisher. To view the original version of this article, and to see current articles, visit cornellhrreview.org. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/chrr/12 
CORNELL H R REVIEW 
THE BUSINESS OF HUMAN RESOURCES 
Kurt R. Fischer 
As an HR professional, I am haunted by the 2005 Fast Company article by Keith 
Hammonds, "Why we hate HR." I am haunted for a number of reasons. One is the 
obvious repulsion at the word "hate." It seems a bit strong but, after all, that is probably 
what sells. The second and more sobering reason is how many business people related to 
the article. I didn't hear a lot of disagreement with the basic premise, which can be 
summed up by the following four sentences in the article: 
"Human resource execs should be making the most of our, well, human 
resources—finding the best hires, nurturing the stars, fostering a productive work 
environment—just as IT runs the computers and finance minds the capital. HR 
should be joined to business strategy at the hip. 
Instead, most HR organizations have ghettoized themselves literally to the brink 
of obsolescence. They are competent at the administrivia of pay, benefits, and 
retirement, but companies increasingly are farming those functions out to 
contractors who can handle such routine tasks at a lower expense. What's left is 
the more important strategic role of raising the reputation and intellectual capital 
of the company—but HR is, as it turns out, uniquely unsuited for that."1 
The other reason I am haunted is because it highlights the inherent variability of our 
profession. There are places where HR is done really well, and then there are others 
where, unfortunately, it is not. 
My premise for this variability is that there is not a standard for practitioners to follow. 
John Boudreau, Professor and Research Director at the Center for Effective 
Organizations at the Marshall School of Business, University of Southern California, 
talks about the mature decision sciences of Finance (return on investment, Economic 
Value Added, net present value) and of Marketing (segmentations, product life cycle), 
and then notes that no such decision science exists within HR. 
The result of this missing ingredient is the basic reason for the variability that exists 
within the profession. In fact, a lot of business leaders do not clearly understand what HR 
is responsible or accountable for. Many are quick to relegate HR to social initiatives 
planning (e.g., United Way drives, company picnics), missing the value the function can 
provide to the business. 
In this paper I seek to address these issues by suggesting a four-factor framework for 
running the HR function like a business: (1) understanding the business HR is supporting, 
Q2010 Cornell HR Review 
(2) developing a basic operating philosophy, (3) determining which HR products and 
services should be linked directly to business success, and (4) operating HR as a business. 
Understanding the Business 
I will use Corning Incorporated as an example. Corning is a world leader in specialty 
glass and ceramics, creating keystone components that enable high-technology systems 
for consumer electronics, mobile emissions control, telecommunications, and life 
sciences. Corning operates in five reportable business segments: Display Technologies, 
Telecommunications, Environmental Technologies, Specialty Materials and Live 
Sciences. Corning competes through sustained investment in R&D, a long history of 
materials science and process engineering knowledge, and a distinctive collaborative 
culture. A narrative in the annual report reviews competition, risks and any legal 
proceedings against the company. And then the financial reports, including narratives, 
which talk about the financial performance of the company in total as well as each 
reportable business segment. There is a wealth of information here and every HR person 
should be familiar with their company's financial performance. This is, after all, the 
reason the business exists and therefore the reason the business supports an HR function. 
Developing an HR Operating philosophy 
Based on a thorough understanding of the business, you should develop a personal 
philosophy about how to operate an HR function that is effective for your particular 
business. At Corning we adopted a philosophy that dealt with our financial realities and is 
summed up well in a book written by Joel Henning, The Future of Staff Groups. He 
explains how all staff groups (finance, HR, etc.) can contribute to the success of the 
organizations they support and proposes three major areas for change, each with several 
sub-bullets: 
First he talks about redefining the staff outlook, including choosing to be a business at 
risk (making no assumptions about your value to the organization); making senior 
management the banker (demonstrating a return on the investment you are asking them to 
make); making core work units the customers (aligning services with their needs, not 
senior management's needs); changing conversations with customers and senior 
management (making the conversation about the function taking accountability for 
adding value to the business); and giving customers choice (if we can't deliver what you 
need, you should work with someone else). 
Next he talks about reorienting staff activity. In this section he talks about laying claim to 
an expertise; i.e., telling your customers what it is you know how to do and sticking to 
that work—not just whatever you're asked to do. Here, relationships come second to 
content, not the other way around. Next is connecting the use of this expertise to business 
results; i.e., demonstrating how you can apply your expertise to yield results. Further 
suggesting include constructing a compelling business argument for using the expertise 
(i.e., talking to the customer in their language and showing how your expertise can help 
them succeed) and insisting on promises and guarantees based on results is another 
2 
Q2010 Cornell HR Review 
principle. You must institute measures and hold yourself accountable to delivering; 
clients have a right to expect success from you. Finally, it is important to advocate for 
client choice—in how you solve problems, in how you work together, and even whether 
you should work together at all. 
Henning then recapitulates the issue through commentary on making a difference. This 
involves identifying the core competence (being clear on the KSAs your function should 
own); choosing a stance about the use of expertise (as the expert, you must stand up for 
the correct application of your knowledge); creating the business argument to support the 
stance (drawing the links to success for your customer); and developing relevant products 
and services, including building the capability of your team to deliver on the expertise 
you've claimed. 
Based on this philosophy, at Corning we developed four "transformation goals" for 
guidance. They were derived from a fundamental understanding of our companies 
businesses, feedback from our customers, and our knowledge of HR operations. Our 
goals were as follows: 
1. Strengthen linkage between HR strategy and business strategy in order to ensure 
the function provides the right suite of services in a manner that more fully 
supports the critical needs of its corporate and division stakeholders. 
2. Adopt a global mindset that enables HR to effectively service Coming's growing 
global business portfolio. 
3. Provide scalable delivery of value-added HR services that can quickly flex with 
the size and shape of Coming's business portfolio. 
4. Continuously reduce HR costs per employee utilizing lean six sigma 
methodology. 
These transformation goals were our constant over the years and we tied our objectives 
directly to them each year. As a result, Coming's HR function became much better 
aligned with its business goals and operating costs were reduced significantly. 
Determining Products and Services 
Each year the senior management at Coming reviews the strategy for each business. This 
process embodied strong product and financial content, but lacked a talent perspective. 
To help us align our products and services with the business strategy we utilized 
Boudreau and Ramstad's HC BRidge process. This system is designed to help line and 
HR business leaders analyze their business strategy through a "human capital lens," with 
a dual focus on creating a deep understanding of the strategy and drawing connections 
between the strategy and those talent pools most pivotal to the success of the strategy. 
This understanding is driven by numerous diagnostic tools, which can best be described 
as covering the following areas: 
• Identification of the sustainable competitive advantages in this strategy, and the 
talent pools that enable those advantages. 
3 
Q2010 Cornell HR Review 
• Identification of business process constraints, and the talent required to address 
those constraints. 
• Understanding of those areas of the strategy that require talent that is better than 
the competitor's, and what actions should be taken to build and maintain the 
required advantages in both number and quality of talent. 
• Identification of specific processes required to create the capability, opportunity 
and motivation required in the most pivotal talent pools. 
The Corning Human Capital Planning process is a four step process that incorporates and 
builds upon the conceptual work contained in HC Bridge and allows both Business Unit 
HR and the function as a whole to connect HR strategy to business strategy. The 
approach is based on a portfolio approach to Human Capital Planning.3 
The focus of each of the four steps is as follows: 
1. Establishing the Type of talent that will either most impact or be most impacted 
by business strategy over the relevant time period (typically 2-5 years). These two 
groups are further segmented into Strategic & Core or Requisite & Non-Core. 
These segment labels are intended as a call to action relative to the roles 
identified. 
2. Projecting the Number and Timing of talent that will be required in each of the 
four role segments identified in Step 1. This includes an understanding of current 
capability of role incumbents, as well as a quantitative consideration of workforce 
dynamics such as voluntary turnover, retirement and transfers to other roles. The 
product is a year-by-year projection of the number of people (net and gross) 
required to address employment growth or reductions and workforce dynamics 
each role examined. 
3. Identifying and examining employment gaps in segmented roles and developing 
concrete plans to address both excesses and deficits in the most efficient and 
effective manner. This process includes developmental plans, reassignment with 
and across divisions, reductions in force and strategic external staffing plans. 
4. Aligning the organization's talent to obtain the highest and best use of each 
performer in each role, both from a business perspective and from an HR function 
perspective. This includes the application of the HC Planning process to the HR 
function itself to ensure that HR is managing both its programmatic spending and 
its human capital to most effectively address the needs both of the total enterprise 
and of its operating divisions. 
Operating HR as a Business 
Delivering the appropriate services in an effective and efficient manner is where this all 
comes together. HR leaders must identify the talent implications based on the needs of 
the business and then align the appropriate HR services to provide targeted solutions for 
the business. Effective utilization of information technology is essential so that the 
necessary information is readily available for decision making. Over a three-year period 
at Corning, we implemented a global PeopleSoft database. The implementation of this 
4 
O2010 Cornell HR Review 
database required a thorough review and standardization of key HR processes. This was 
not an easy or quick project, but the end result has been extremely beneficial. The quality 
of the data was vastly improved. And the value of having accurate, timely data for 
decision making became widely known and readily used. We now have more data 
available to employees and managers on a real-time basis. And this availability is 
reflected in improved customer service survey results. We also implemented a set of lean 
Six Sigma tools, which have helped us improve our services and products. A disciplined 
approach utilizing these tools has been instrumental in continuously improving our 
products and services. 
Summary 
Having a standard framework for HR to follow will help eliminate a great deal of the 
variability that exists in the workplace and improve how the function is perceived by its 
stakeholders. One such framework includes understanding the business HR is supporting, 
developing a basic operating philosophy, determining which HR products and services 
should be linked directly to business success, and operating HR as a business. 
When HR is run well, it is an invaluable asset to the success of the enterprise. I imagine a 
day when Fast Company publishes an article titled "Why we love HR." K 
Kurt R. Fischer is a management consultant with 33 years of experience in HR. He was 
previously the Senior Vice President ofHRfor Corning Incorporated and currently 
serves on the Board of Directors for Corning Federal Credit Union, Corning Center for 
Learning, and the ARC of Steuben. 
Keith Hammonds, "Why We Hate HR," Fast Company, 1 August 2005. 
http://www.fastcompany.com/magazine/97/open_hr.html 
Joel Henning, "The Future of Staff Groups: Daring to Distribute Power and Capacity," Berrett-
Koehler Publishers, Inc., 1997 (p. 13). 
Matthew Brush & Donald Ruse, "Maximizing Value for the Business Through Strategic Human 
Capital Planning," The Human Resource Planning, 2005. 
http://www.workinfo.com/free/downloads/MaximizingValuePlanning.pdf 
5 


The Business of Human Resources

[Excerpt] The result of this missing ingredient is the basic reason for the variability that exists within the profession. In fact, a lot of business leaders do not clearly understand what HR is responsible or accountable for. Many are quick to relegate HR to social initiatives planning (e.g., United Way drives, company picnics), missing the value the function can provide to the business. In this paper I seek to address these issues by suggesting a four-factor framework for running the HR function like a business: (1) understanding the business HR is supporting, (2) developing a basic operating philosophy, (3) determining which HR products and services should be linked directly to business success, and (4) operating HR as a business.3_17_2010_THE_BUSINESS_OF.pdf: 793 downloads, before Oct. 1, 2020

eCommons@Cornell

https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1002&amp;context=chrr

The Business of Human Resources

Abstract

Similar works

Full text

Available Versions

DigitalCommons@ILR

eCommons@Cornell