What HR Is (and What It Isn’t) – What Growth Companies Should Demand from HR
Insights | 15 October 2024
When thinking about HR, particularly in the fast-paced world of growth companies, the term can often seem vague. Is HR just a back-office function handling administration, recruitment and compliance? Or can it be a strategic partner in scaling a company? To answer this, we need to redefine what HR truly is—and isn’t—in the context of modern business.
What HR should not be in your company
HR is no longer the administrative department it once was. While traditional tasks like payroll, compliance, and recruitment remain essential, HR is evolving far beyond these roles. It isn’t just about putting out fires, ensuring legal boxes are ticked, or processing paperwork. The outdated view of HR as purely administrative ignores its critical role in shaping business success. In the era of AI, HR is the function that truly understands people – we are messy. We are not always logical, we are not linear. You cannot just prompt people to do things, because there are history and triggers which you are and can’t be aware of. The AI can solve a lot – but people? No.
What HR should be in your company
In 2024 and beyond, HR is becoming a strategic force within companies, leveraging data, AI, and a deep understanding of people to shape the workforce. HR leaders today should be deeply embedded in the company’s leadership, driving strategic initiatives that align with business goals. This means not just finding talent but shaping a culture that drives innovation and growth.
However, it’s crucial to recognize that even traditional HR functions, such as recruitment, have evolved into highly strategic activities. Effective recruitment is no longer just about filling vacancies. It’s about building a talent pipeline that aligns with your company’s long-term vision. Recruitment strategies can shape the entire course of your business by ensuring that the right people are in place to execute your growth strategy.
Alan Guarino, head of Korn Ferry’s CEO services, highlighted a revealing truth: at a CEO Summit, none of the attending leaders felt HR had played a critical role in strategy execution in the last year. This shows how much opportunity is being left on the table. Too many CEOs only expect HR to manage HR systems and leadership development programs, neglecting HR’s potential as a driver of business growth.
What growth companies should demand from HR
As a growth company CEO, you should expect more from your HR function than just administration and compliance. Here’s what you can expect:
Strategic partnership – Your HR leader should be sitting at the leadership table, contributing to strategic discussions. HR’s role is to understand business goals and ensure that the people strategy aligns with those objectives. If HR isn’t part of your executive team, it’s time to ask why not. It is hard to make strategic decisions, if you are not part of the discussion.
AI and data-driven decision making – With the rise of AI, HR is no longer just a “people” function. HR should be connecting data and AI to improve hiring, streamline processes, and personalize employee experiences. Ask your HR team how they are using technology to optimize recruitment, enhance culture, and retain top talent.
Culture and community building – As more companies embrace remote and hybrid work, the ability to foster community and a strong organizational culture is vital. HR should be the architect of this environment, creating spaces—both physical and digital—that help people connect, collaborate, and innovate.
Employee well-being and work-life balance – Employee satisfaction is no longer just about salary and benefits. In 2024, well-being initiatives that integrate well-being and work-life balance are becoming standard. Your HR team should be at the forefront of offering policies that supports the holistic well-being of your employees. It is not (just) about holding a mental health webinars, but to actually acre about removing obstacles to work and increasing psychological safety and support.
Diversity, Equity, and Inclusion (DEI) – Finally, HR should lead the charge on DEI initiatives. An inclusive workplace isn’t just a compliance requirement—it’s a strategic advantage. According to McKinsey’s studies, diversity in both the workforce and leadership has a significant and direct impact on a company’s financial performance and success—there are substantial differences, often amounting to tens of percentage points, when compared to more homogeneous teams. However, it’s not enough to simply hire people who differ in terms of background, culture, age, gender, life circumstances, or work history. Company culture and leadership also play a crucial role—particularly in what happens after an individual is hired. Ensure your HR team is leading the charge on DEI initiatives, embedding diversity into the recruitment process, promoting pay equity, and creating a culture where everyone can thrive.
Invest to expect more
This should go without saying, but to demand more from HR, you must also be prepared to invest in it. HR’s ability to operate strategically hinges on having the right resources, technology, and executive support. This includes investing in tools for data-driven recruitment, culture development, and well-being programs, as well as ensuring HR is positioned to influence decision-making at the highest level. Without sufficient investment, HR will struggle to deliver the strategic impact you expect.
Conclusion
To ensure your HR function is equipped to drive your company’s success, consider these five core questions:
- How does our HR strategy align with our business objectives, and how has it contributed to measurable outcomes?
- How is HR leveraging AI and data to improve recruitment, employee engagement, and decision-making?
- What are we doing to foster a strong company culture, particularly in remote or hybrid work environments?
- How does HR prioritize and promote employee well-being, including work-life balance and flexibility?
- What steps are we taking to ensure diversity, equity, and inclusion are fully integrated into our hiring, promotions, and overall culture?
These questions will help you assess whether your HR team is equipped to support your growth strategy while ensuring the strategic integration of recruitment and talent management.
In a growth company, HR is not just an administrative function—it’s a strategic partner that drives the company’s ability to scale and succeed. CEOs should demand an HR department that uses data and technology to make smarter decisions, builds a strong and cohesive culture, and contributes meaningfully to the company’s overall strategy. When HR is given the space to be truly impactful, it can be the catalyst the company needs to transform from good to great. However, it also means that you and your decisions can and will be challenged – are you ready for it?
Writer: Kaisa Seppälä
Writer is partner at HT Growth Partners & Head of HR services at Notarec