January 16, 2019 – Originally published in Human Resource Executive

HR and business live in two different spheres—and, for true organizational success—they need to start converging.

For instance, if one compares the “Most Admired in HR” list by HRE and Korn Ferry to the wider Fortune list of the “Most Admired Companies,” the discrepancy is an eye-opener. Facebook, a perennial leader on the HR list, for example, disappeared from Fortune’s overall top 10 list. Does that mean excelling in HR has little to do with overall admiration? Or conversely, can you have bad HR practices and still rank high on “most admired” lists?

The answer is: It depends. People matter but strategy—competing well—matters more. This is a rather provocative statement, and I expect HR executives to resent it. But as CFOs tell you outright in a piece in this publication, business leaders do not recognize HR’s effect on the bottom line. And yet, the entire space of HR discussions, trends, benchmarking and tips focuses on people and completely ignores business strategy. HR executives have concentrated exclusively on operations and little on the strategy-making process. It is as if they are resigned to play no role in strategy but they can’t admit it.

I run war games for the Fortune 500. These are strategy workshops that pressure-test ways to outsmart competitors. I hardly ever encounter HR executives in the room.

Current HR thinking focuses on the optimal execution of strategy. Flexible teams, design thinking, employee engagement, breaking silos and creating collaboration are hallmarks of good operational culture—but this has little to do with actually making strategy.