Importance of HR Governance

Historically HR leaders have not been challenged to think formally about functional governance issues. By "functional governance" we mean applying an approach to governance that focuses on performance (results) as well as conformance (compliance) to key support functions (HR, Finance, Technology). However recent corporate scandals like Enron have made all corporate and functional executives much more aware of their personal and legal accountabilities. In the few instances where HR governance has been made explicit, it is usually synonymous with compliance and does not address the central issue - improving leadership and management of a function that invests an average of 36 per cent of operating revenue in remuneration, retirement, training and other human capital programmes.
With over a third of company revenue at stake, it's time for CEOs to expand their focus from compliance-driven corporate governance to the far more productive and profitable issue of functional governance. In this article, I shall explore the potential performance enhancement opportunities achievable with improved HR Governance.
What is HR Governance?
HR Governance is the act of leading the HR function and managing related investments to:
•optimise performance of the organisation's human capital assets;
•define stakeholders and their expectations;
•fulfil fiduciary and financial responsibilities;
•mitigate enterprise HR risk;
•align the function's priorities with those of the business; and
•assist HR executive decision making.
It's important to note that while corporate governance is treated as a strategic objective to attain, HR governance is not. HR Governance is a systematic approach to management that enables the function to achieve strategic and operational objectives and performance outcomes.
Why does HR Governance matter?

HR Governance can have a measurable impact on your business by improving productivity and helping to drive organisational change. Some of the benefits of establishing a workable HR governance structure are:
•clear reporting structures
•role clarity and value-adding HR activities and decisions at each level of the organisation
•logical decision making boundaries and controls
•integration and alignment with business priorities
•clarity around an organisation's tolerance of duplicative activities
•transparency of process and resultant employee trust/commitment
•demonstrable evidence of HR's value to the business.
The issue for every organisation is to have assurance that, given its own unique context, its governance processes will reduce operational and legal risk while enhancing its ability to deliver strong performance.

- anshumali.saxena@soilindia.net