It's Time to Split HR

Charan calls for eliminating the position of the chief human resource officer and splitting the Department of Human Resources into two strands. One strand - we might call it HR-A (for administration) - would primarily manage compensation and benefits. It would report to the CFO, who would have to see compensation as a talent magnet, not just a major cost. The other, HR-LO (for leadership and organization), would focus on improving the people capabilities of the business and would report to the CEO. HR-LO would be led by high potentials from operations or finance whose business expertise and people skills give them a strong chance of attaining the top two layers of the organization. Leading HR-LO would build their experience in judging and developing people, assessing the company's inner workings, and linking its social system to its financial performance. They would also draw others from the business side into the HR-LO pipeline.