Say the right thing.
At the grand level, what HR tells employees has to match what the company actually believes; empty rhetoric only breeds discontent. And when it comes to the details of pay and benefits, explain clearly what's being done and why. For example, asks consultant Dennis Ackley, "When you have a big deductible, do employees understand you're focusing on big costs? Or do they just think HR is being annoying?"
Measure the right thing.
Human resources isn't taken seriously by top management because it can't demonstrate its impact on the business. Statistics on hiring, turnover, and training measure activity but not value. So devise measurements that consider impact: When you trained people, did they learn anything that made them better workers? And connect that data to business-performance indicators — such as customer loyalty, quality, employee-replacement costs, and, ultimately, profitability.
Get rid of the "social workers."
After Libby Sartain arrived as chief people officer at Yahoo, she moved several HR staffers out — some because they didn't have the right functional skills, but mostly because "they were stuck in the old-school way of doing things." Human resources shouldn't be about cutting costs, but it is all about business. The people who work there need to be both technically competent and sophisticated about the company's strategy, competitors, and customers.
Serve the business.
Human-resources staffers walk a fine line: Employees see them as stooges for management, and management views them as annoying do-gooders representing employees. But "the best employee advocates are the ones who are concerned with advancing organizational and individual performance," says Anthony Rucci of Cardinal Health. Represent management with integrity and honesty — and back employees in the name of improving the company's capability.
Make value, not activity.
University of Michigan professor Dave Ulrich, coauthor of The HR Value Proposition (Harvard Business School Press, 2005), says HR folks must create value for four groups: They need to foster competence and commitment among employees, develop the capabilities that allow managers to execute on strategy, help build relationships with customers, and create confidence among investors in the future value of the firm.
A version of this article appeared in the August 2005 issue of Fast Company magazine.