How Organizational Leadership Fits With Human Resources

managementSkill DevelopmentWorkplace Success
two black females from HR and organizational development talk

Organizational leadership is often paired with human resources. Some see the two as different sides of the same coin while others view it as two separate disciplines. While each plays a specific role, they do overlap in certain areas.

Human resources focuses primarily on the employment process from recruitment to termination and is task-focused. HR deals with employee management, payroll, CSM and PSM certification and development, mentorship, labor  relations, policy development, and legal and government compliance (such as CCPA).

Organizational leadership is more visionary. It takes a broader view of the company’s direction and applies critical thinking to identify opportunities for growth and development. Often, this involves change. Those trained in organizational leadership use principles of psychology and behavioral science to guide management and employees through the change process.

How does organizational leadership fit with human resources?

Organizational leadership focuses on the overarching company strategy while human resources manage the human capital strategy. Organizational leaders help marry employee goals with organizational goals.

Despite artificial intelligence, automation, and robotics becoming more common in the workplace, companies still require human resources to function. Where organizational development (OD) overlaps with HR is in leveraging human resources to effect change. OD goals cannot be achieved without human resources.

Here are three organizational change processes that HR and OD need to manage together.

1. Restructuring

When restructuring is necessary, HR and organizational leaders combine efforts to identify talent and redirect their skills towards meeting the company’s goals. This may require working with HR to train employees for new or adapted roles. It may also require lay-offs and the OD practitioner can help steer the company through such a difficult time while the HR practitioner handles the termination process.

2. Changing the company’s culture

Both HR and organizational development are involved in establishing the company’s culture. If the culture is negative or toxic, OD may drive the shift to a healthier organizational culture while HR will help entrench it and encourage new employees to embrace it.

3. Mergers and acquisitions

During a merger, tensions and anxiety often run high among employees. Employees may fear losing their job or having their role changed. They may feel unsettled at the thought of new staff joining their team, being assigned a new line manager, or a disruption in the organization’s culture.

If changes like these are being implemented, HR will manage many of these processes and counsel employees individually in order to allay fears. Organizational leaders will explain the new vision and how the two companies will be integrated.

Clear and ongoing communication is key to managing an M&A. Let’s look at two examples, one of a successful M&A and one a failed M&A:

  • When ICICI merged with Bank of Madura, the two banks managed to successfully build a cohesive company in just one year. ICICI, one of India’s largest banks, merged with the much smaller Bank of Madura. Many Bank of Madura employees were understandably nervous about their future prospects in the new company. They managed the process in the following way:
    • Clear communication channels were in place throughout the process.
    • Training programs were implemented to upgrade knowledge and skills of the employees and manage expectations and attitudes.
    • ICICI kept communication lines open with Bank of Madura’s employee unions to maintain good employee relations.
    • Both banks experienced staff reshuffling. ICICI transferred 450 BoM employees to ICICI Bank, while 300 ICICI employees were shifted to BoM branches.
  • The Daimler-Chrysler merger, on the other hand, is an example of poor cultural change management that led to a failed merger. German company Daimler’s hierarchical and bureaucratic management style clashed with Chrysler’s more relaxed American style. The cultural differences led to power struggles that were not managed properly, and ultimately the two companies parted ways.

How to create more synergy between HR and organizational leadership

HR focuses on the day-to-day management of employees. Organizational leadership focuses on employee empowerment and how to get the best out of each employee. Both approaches are needed in an organization and a more hybrid model of HR will include both. Both these disciplines have strengths that complement the other.

However, some OD practitioners like to draw a distinction between the two fields. Rather than put HR into a box, OD should draw HR into strategic discussions and planning. This helps HR broaden their vision and see the organization’s bigger picture.

Working in partnership while focusing on their respective strengths is key to creating more synergy. HR’s role is to find great talent, and OD directs that talent in a way that best serves the organization’s goals. Both can work with employees to train and map a career path that capitalizes on their strengths and keeps them engaged. An engaged employee is passionate and productive and that leads to more successful organizations.

Human resource departments have often been undervalued in the past. This is largely due to their legacy as personnel management departments. Modern HR has shed this traditional image by incorporating additional functions, such as employee welfare. The rise in the role of organizational leadership is helping HR evolve even further into a more strategic role.