Who’s HR’s Customer

For HR to become more effective as a function and as individual players, the most critical question to be resolved is often: Who is HR’s customer? It’s a question which rarely is asked because everyone assumes the answer is obvious. But when you ask different people in HR, you get different answers. It’s no surprise that many of the actions that HR units initiate are confusing (or downright infuriating) to the organization.

The question of who the real customer is, isn’t a “no-brainer.” It’s often the most difficult and the most impactful decision you can make. In many situations, it’s the least-discussed problem and is a question which most people don’t even think to ask. It’s a classical double-blind problem. Most “don’t know what they don’t know.” Most don’t even realize they should be dealing with the question. What makes the question even more troublesome is that there’s no right answer. There are competing right answers. It’s a classical dilemma. You’re damned if you pick one and damned if you pick the other. Picking either has opposite advantages and disadvantages. But you also can’t avoid making the choice. To not choose consciously and to not communicate a choice clearly guarantees that an HR unit will get caught in paradoxical situations as illustrated throughout this story.

Stakeholders aren’t all created equal. The distinction between different types of stakeholders is also one which is often fuzzy and problematic for HR and other internal staff units, and contributes to this problem. I’ve found it helpful to divide stakeholders into four categories. Customers, influencers, end-users and partners.

• Customers: A customer makes a buying decision (to use you or someone else) and negotiates a formal or informal “contract” with you, the service provider.
• End-users: An end-user (sometimes called a consumer) receives the service.
• Influencers: An influencer sets the parameters within which you can or must operate, but doesn’t buy the service.
• Partners: A partner works with you to provide a service. With partners you have mutual need, common objectives and shared risk related to that service.

What makes it difficult is that sometimes different stakeholders in your marketplace switch roles for different projects or demands they’re making. So you have to be careful to know not only what your own business strategy is, but what role they’re in at the time and what your commitments to them are in that role. Remember, all of them make demands, but only the professional in place at the time can sort out the issues, plan an appropriate response and know what the appropriate limits, possibilities and flexibilities are.

It’s also likely that in different settings, one HR person is a cop (as in the case of working for the CEO, enforcing policy) and the other is a consultant (working for the client, developing unique programs with no policy enforcement responsibilities). It’s even more likely, however, that those roles are mixed between HR people and between stakeholders at different times. Is it any wonder that line customers are confused and skeptical when a corporate HR person (or even someone from unit/plant HR) shows up in his or her “sincere suit” with briefcase in hand and says, “I’m here to help you?”

The overarching concept of who the HR department really serves and how the others in HR’s marketplace fit in is critical to clarity for all. But such a concept doesn’t come easily. However, there are some frameworks that can help. Involving the entire HR staff (or as many as feasible) in wrestling with the question is critical. An answer can’t be decided just from one perspective or be handed down from above. Without the in-depth understanding that comes from wrestling with an issue as a human resources team and contributing to the hard choices between the good alternatives, much is lost. A “mission, vision and values” statement from one or two leaders doesn’t provide a guide when HR people encounter the common but predictable dilemmas built into their jobs.

Figure out your business strategy. The process of determining who the real customer is for the HR department solves only part of the solution to the problem of developing a successful future for HR. It’s equally important to determine what HR’s business strategy is as a function. Thinking about HR as a business changes everything about how people deal with the issues and dilemmas they face. There are always competing strategy concepts in any business. HR is no exception. If you just ask the “customers” what they want and try to aggregate it to satisfy all of them, you end up with the strategic mess that most internal staff departments are trying desperately to resolve. Usually the feasible strategy concepts are mutually exclusive in their implementation — that is, the investment of resources to do one takes away from being able to do the other. There’s never enough to be able to do them all well. What also complicates the situation is that different strategy concepts dictate different concepts of customer. Strategic clarity and customer concept are mutually dependent factors. One cannot be solved without the other. The answers for each affect the other. The problem must be addressed systemically, recognizing the interconnectedness of the concepts of strategy, customer and organization design.

HR is in good company. Many internal staff units suffer from this problem. Clear concepts of strategy not only focus efforts but also provide boundaries. The greatest difficulty HR and other internal service units usually have is the inability to say “no” to customers and end-users (or more correctly, to noncustomers or to customers asking for what has been decided is “out of bounds”). Many professionals in internal staff departments not only can’t say “no,” they aren’t even able to say “wait.” This common bind is a result of not having clear strategic boundaries that are agreed to by customers, influencers and sponsors in the firm. The end-users are subject to those boundaries because their influencers (their bosses, who are your real customers) negotiated them with your department. Without those boundaries, there’s no politically defensible way to say “no” or “wait.” The service unit begins to suffer from “customer-driven mediocrity” — trying so hard to do it all for everybody, they just can’t do it all well enough or fast enough. With a clear focus and boundaries, HR departments are well on the way to becoming a focused, service-providing unit (SPU), a viable business within a business.

The change process to move from an organization that’s struggling with its strategic identity and its boundaries (its ability to say “yes” to some and “no” to others), and turn it into a strategically integrated SPU, isn’t difficult to understand. The steps are simple, but it becomes a complex and difficult process in the context of the dilemmas faced in each unique marketplace. It requires a big time investment and the involvement of a firm’s members. It also requires some hard choices, by consensus, between good alternatives — the hardest choices to make. But it’s well worth the effort, both in creating focus in the organization and in preparing people to work independently and consistently with each other and with customers in a manner that stems from a clear, focused and bounded business strategy. Recognizing there’s a problem and agreeing upon what that problem is — that HR needs to figure out who it’s customers are — must come first. It’s often the biggest hurdle to overcome.

Workforce, May 1998, Vol. 77, No. 5, pp. 70-71.