Why It’s Time To Give HR A Strategic Seat At The Leadership Table

By Jack Stack and Darren Dahl

Talent is scarce and it’s going to get scarcer in the future. The value of companies will soon be tied to the value of their people. The ones with the best talent strategies will dominate their markets in the coming decade.

What role does human resources play in your company? Depending on how big the business is, you might not even have a human resources person, let alone an entire department. Either way, the tasks typically associated with HR—like hiring and firing, compliance regulations, and compensation—need to be tackled by someone in the organization. Doing these tasks well is critical to the success of any company, especially during challenging times like a pandemic or a recession.?

But that’s usually where it stops. Even those organizations who have taken the step to create C-Suite positions like Chief Human Resource Officer or Chief People Officer all too often look to these HR professionals to help execute plans—not provide their voice in setting strategic direction.

It’s time for that to change. It’s time to shift HR from the role of risk mitigation and box checking into one of strategic thinking. It’s time to give HR a strategic seat at the leadership table. We need our HR people to think and act like businesspeople. We need to get our HR teams working on the operations of the business, not just in them. And we need to make these changes now if we want to create a desirable future for the next generation of workers.

Why? Because the talent in our organizations will be the single most critical factor that either fuels or constrains the future growth of the organizations. We all face a looming crisis that will require everyone to fix it as soon as possible.

How Can You Grow Without Enough People?

The first steps of transforming the role of HR inside our organization began in 2014. It was during one of our twice-annual strategic planning sessions (what we call “High-Involvement Planning ?”) where associates from our ten divisions present their annual and five-year sales and financial plans to their peers and our board of directors. It’s hard not to get inspired during these meetings as our associates present their vision of future growth based on their analysis of hard economic data, market trends, and competitive insights gained from their customers.

As an organization, we pride ourselves on the accuracy of our forecasts (historically 97%) because we work hard at gathering the right data to understand what the opportunities and threats are. As we like to say, there’s no such thing as fairy tales when it comes to planning. We need everything to be rooted in reality.

During that High-involvement Planning meeting in 2014, Keith, one of HR associates, was watching each of the presentations that day. And whenever an organization put up a slide containing its five-year growth plan, Keith would start scribbling like mad on a pad of paper. He was doing quick calculations to determine the average sales-per-employee for each organization. When the presentations concluded, and the collective five-year growth plan was flashed on the screen, Keith checked his pad and then raised his hand to ask a question. “It’s really awesome to see all the growth everyone is planning over the next five years,” Keith said. “But, based on my calculations, that means you’ll collectively need to hire a lot of new people to do all that work. What’s your plan to accomplish that?”

Rethinking the People Strategy

It was like Keith punched me in the gut. I couldn’t breathe. He was absolutely right. If we wanted to take advantage of all the opportunities in front of us, we needed to completely rethink how we approached the recruitment, development, and retention of our people not just now—but also well into the future. He had put his finger on the biggest constraint to our future growth. How could we grow without enough people?

When I looked at the rest of the group, not one other person caught Keith’s point. In fact, they hadn’t even seen the swing coming. It was clear they had never engaged the HR people like Keith in creating their strategy. They just assumed HR would somehow cover the people gap.

That’s when I knew that we were truly taking HR for granted—and that we needed to rethink the role of HR inside our organization to help us get where we wanted to be. Big time.

Planning For The Future

We talk a lot about the future inside our company. We’re always looking ahead to try and anticipate what kinds of problems or opportunities might be headed our way so we can take actions now to address them. We believe there’s a big storm coming in 2030 caused by the changing demographics in the workforce. The first signs of its impact are already here since we have 11.5 million open jobs. By 2030, the last of the Boomers will retire, which will lead to an even greater shortfall of available workers that forecasts say could bloom to 85 million open jobs. There simply won’t be enough people to do all the work that needs to get done. It’s simple math. According to our friends at ITR Economics, it’s going to create an economic tsunami like we haven’t seen since the Great Depression. The forecast is dim.

That’s why we need our HR teams to help us find solutions.

Engaging The People On The Fringe

One example is helping to increase the labor participation rate, which has remained flat at 62% for decades—and shows no indication that it will ramp up in the future. We need our HR teams to find ways to unlock and engage all those people who continue to sit on the sidelines.

We may also need their help in reforming our immigration policies. Sure, there are concerns about bringing in the right employees from the right countries. But businesses are trained to vet and train employees every day, which should be more efficient than doing it at the border.?

The point is that the labor market is already tight—and it’s going to get a lot tighter in the coming years. Don’t get fooled by what we see day-to-day as some companies lay people off to adjust to economic conditions. We need to look further out. Our company has chased customers for years knowing we could always find the people to do the work. That’s not true anymore. We have customers—but we can’t find people.

That’s why the value of companies one day soon will be based on the quality and care of its people. It will become the point of differentiation. The organizations with the best talent strategies will dominate their markets in the coming years.

But the overall people shortage will continue to exist for everyone until we join together and do something about it. Our human relations teams can lead the charge by building a community of people capable of crafting the solutions to these problems before it’s too late.

Reimagining The Role Of HR

Moving forward, HR needs to have as much input as the CFO and CTO when it comes to setting the future strategy of the company. The skills they apply to their jobs day in, and day out, have always been valuable. Now, we need them to be heard at a strategic level. We’re counting on them to ensure we have the right people in the right seats to make our plans. The organization has to take into account what they see as the future requirements of work and factor those into its plans.

Our HR team is critical to our future growth and success. It’s not enough for them to work inside a department. Their input cannot be treated as just another job to be done. Rather, they need to be the ones leading the tough conversations with everyone in the organization around questions like: Do we have enough people? If not, how can we attract them? They need to be guiding us to where and how we can grow based on where we can find people with the right skills and talents.

Talent Retention

It’s not just a game of recruitment; it’s also about learning how we can better develop and retain the people who join our team.

We also need our HR professionals to embrace new roles as talent attractors and to train our leaders to become career counselors. We need to help young people develop personal goals to work toward. We need our HR team to help us boost the labor participation rate moving forward by promoting career opportunities and giving people a reason to want to come to work and to enjoy it.

We’ve found that people want to be part of developing the future if given a chance. We’ve also learned that people also want to work for a company they can trust and that invests in them and their careers. That means we need to find ways to connect with people who want a long-term career—not just a job. We want them to grow and learn new skills and earn new promotions inside our business—as well as enjoy the long-term payoff of being part of an employee-owned business.

Over the past few years, we have made significant investments in our HR team—including giving them a seat at the leadership table, which includes our board of directors. We feel fortunate to have the kind of A players on our team who are ready to lead and grow our business in ways that will create a sustainable future for themselves and their families, as long as we continue to listen to their insights.

We also need their help in creating a community of people willing to come together and help solve this challenge facing us all without hurting each other in this War for Talent .

Solving The Looming Talent Void Together

The truth is that even as much as we are doing—and plan to do in the future—we’re still seeking answers to this talent void. We recognize we can’t come up with all the solutions by ourselves. The boulder is too heavy to push uphill alone. We need to tackle this together—to tap the Wisdom of the Crowd by collectively sharing what’s working inside our companies (and what isn’t working). It’s going to take a village.

If you’re dealing with this problem—or already testing out solutions of your own—we want to hear from you. That’s why we invite you to join us at our upcoming conference and add your voice to the conversation. Through the various breakout sessions, working lunches, and networking events, we can learn from each other about how we, along with our educational system, can partner together in solving this looming talent void—together. That’s the power of a community.

You can find out more about the theme of the conference, along with an agenda and the keynote speakers, here . We look forward to seeing you there.