High Time for Business Partnership
Written by Mike Markos and John Pancoast


Several years ago the EVP of Human Resources for a major oil and gas company told his HR leadership team, It is not enough to be business partners…you must be business people. His HR function had already created state of the art employee self-service, recruiting, expatriate support, and professional development capabilities. They had mastered the basics of HR, and the time was right to turn their attention to the higher value adding roles. Using their aspiration to be business partners as the benchmark, he pushed his senior team to embrace an even broader operational mindset. Communicating this vision and modeling it in his role as head of HR, this visionary leader was the catalyst for a newly relevant HR function throughout the company.

Staff functions in large companies often account for up to 10 percent of revenue. Transaction processing and compliance activities account for about 60 percent of that 10, while the remaining 40 percent is discretionary and can only be justified by the value-creating roles the professional staff take on in support of the business.

In many large companies, Finance and Human Resources staffs have been aware of the business partnership challenge for at least ten years, often coupled with the need to define the "remaining" organization during the transition to a new service delivery model. During this period they have made major progress in re-engineering business processes, implementing client friendly technologies, establishing shared administrative services, and outsourcing significant parts of their functions. Yet, the business partner challenge remains largely unfulfilled.

While we have observed strong business partnership behavior sporadically in many companies, it has been achieved comprehensively in only a very few. The challenge remains, "How do we institutionalize business partnership in our organization?"

Our work for the past ten years on partnership topics has led us to many insights about what partnership is and how it has been successfully implemented. Although questions remain about the mechanics of implementation, the broad requirements are certain. Business partnership is built upon a foundation of process excellence and functional competence, conditions that certainly do not exist everywhere. Beyond this, it requires a particular mindset that rarely occurs spontaneously. It must be deliberately cultivated.

What is Business Partnership?

Some people have insisted that partnership is about the skills, tools and experience that staff people bring to bear in working with operating people. Others suggest that having an organization with people dedicated to business partnership does the trick. Our experience shows that both of these notions miss the central point: Business Partnership is a style of staff-line collaboration in pursuit of broad business objectives. It is demonstrated when:

  • Professional staff collaborate in situations that require the knowledge and experience of both operating managers and key staff people
  • Leaders break down functional silos for the benefit of customers, fellow employees and shareholders
  • Staff people bring business issues to discussions with operating managers and achieve superior solutions together

The relevance of business partnership is rooted in the belief that organizations arrive at better decisions through collaboration in addressing business issues, through deliberate exploration of alternatives, and through honest and open discussion of the impact and consequences of choices.

The annual planning process provides a good case in point. Recently, we helped the finance leadership of a health care organization to develop a better annual planning process. Historically, business planning happened as it does in most companies: Finance built the planning tools and sent them out to the operations with instructions and timetables for the overall process. Business units went through their independent goal setting, while each business leader wondered what the "right answer" would be. Top management had objectives and targets in mind, but did not want to share them for fear of influencing the outcome in some negative way.

Finance consolidated the results and reviewed them with the corporate executive team. Of course, as is almost universally true, the results did not meet the expectations and several rounds of negotiations ensued before the plan was agreed. The time consuming and argument provoking process stripped away all support for the result and undermined management's ability to work together for the common good. Perhaps that was why they had missed their targets more often than not in recent years.

The finance leaders decided to cut the time and enhance the result by facilitating a process with business partnership in mind. Elements of the new process were top-down goal setting by the executive team, identification of the six to eight major levers of improved performance by finance, and creation, by finance, of formal occasions for collaborating in defining the outcome of the planning process. The organization completely redesigned the 2005 planning process and executed it in less than half the normal time. They have a senior leadership group that understands completely the strategic choices that led to the final plan, because they participated directly in creating it. And, each business and functional head understands the importance of his or her unit's commitment to meeting the overall plan goals.

What gets in the way of business partnership?

We know from experience that partnership cannot flourish in every environment.
The biggest hurdle a decade ago was that the staff was too busy working on day-to-day requirements. This is still an issue in companies that have yet to address the cost and integrity of their core processes. A telling anecdote is of the financial analyst bringing the month-end financials to the business manager who asks, "what is this report telling us?" The analyst answers, out of breath, " I have no idea. I worked the last three days to get the numbers together, and did not have time to think about what it means." In effect, the urgent work always pushed out the critical work.

But this hurdle was only part of the story. Staff people sometimes focused on the transactions, the numbers, and the reports because it was within their personal comfort zone. They only needed to know about their HR or Procurement or Finance organization rather than current state and dynamics of the business. Lastly, they did not feel the need to build deep and trusting relationships with their counterparts in operations since they could exercise their governance roles without them. So, while there were some very effective staff people who "got it," this was presumed to be by dint of their own personal curiosity, intelligence, commitment, or relationship skills. The bottom line was that business partnership was neither well defined nor truly ever expected of the function as a whole.

New service delivery model changes everything

There is no longer a "comfort zone" for staff professionals. New service delivery models have removed that shelter. These models have largely taken transaction processing and standard reports out of the businesses. Although the intent of shared services and other models in most companies had been to reduce cost, it usually had an equal or at least parallel purpose to free up time of skilled staff for higher value-adding activities. Yet these higher value activities were generally not defined and therefore were only sometimes implemented. When remaining staff was reduced, it was often consolidated to a higher organizational level. Sometimes the tools and analytical capabilities were upgraded through new data management and reporting software. But there were no rules of the new game to help staff people understand how to operate and manage under the new model. Their organizations had become exposed and their value would soon be questioned.

High Time for Business Partnership

Business Partnership from the staff functions is critical in this competitive world. And it needs to be delivered at strategic, tactical, and even transactional levels. Typically Finance people think of strategic planning, budgeting, performance reporting, and financial analysis as the areas of business partnership. HR people think of talent management including its many components as well as performance management as key business partnership areas, but they are unlikely to be successful in talking of partnership from their own functional perspective. They need to look at business partnership from the point of view of operations, its processes and objectives. The result should be that Finance people would no longer provide value by providing financial analysis. Rather, they would think of themselves as partners with operating managers in running a successful business in areas that go well beyond the traditional capital or acquisition analysis. Human Resources people would no longer think of themselves as the expert who provides development plans or recruits candidates. Rather, they would be partners in workforce management, along with leaders of the functions they serve.

A large industrial company with global operations was facing the decision of replacing the retiring president of one of its international operations. The consensus across the company had been that the "heir apparent" would move immediately into the role of president. This view was held by most other senior executives as well as by members of the Board. However, the executive vice president of human resources pointed out to the executive committee that the business was changing, that different leadership talents were required for success, and that a new person, better equipped to lead the organization, could be found. The business partnership climate in the executive suite allowed the HR head to change the thinking of the executive committee. The HR head recognized that his job of talent management went far beyond recruiting and professional development. The value he brought was linking his keen understanding of the business with the functional capability of HR.

How to bring true Business Partnership to your business

Although the path to partnership is different in each company, there is a common set of requirements and logical sequence of addressing them. The greatest facilitator of Business Partnership is "mind-set". As long as the staff thinks of themselves as Finance people or HR people, they will not be able to achieve true business partnership. Once they change that thinking, they are launched on a very productive journey.

Business partnership is challenging to implement because it requires a steady commitment over several years. In an era of frequent organizational changes layered on top of transformational initiatives, it can be difficult to maintain the organization's focus on a single overarching objective. We have found the following framework helpful to executives building a roadmap to business partnership.

1. Lay the groundwork for Business Partnership by exercising Leadership on the topic. Business partnership will have to be a top priority for many years over the long term for it to succeed, and it cannot be viewed as a one-year initiative. Discuss business partnership with line managers and set expectations with your functional leaders. Make it the underlying priority in everything the function does. Promote dual dimension thinking so that your people think about the business needs and the functional needs at the same time and with the proper balance. Another way of thinking about this is that the Finance or HR manager thinks of all business issues as if they were senior executives and needed to consider line and staff issues concurrently.

2. Communicate the criticality of Relationships. Relationships are essential to making any partnership work, and building and maintaining them requires training and practice. Let people know the importance of building rapport, meeting commitments, observing communication expectations and speaking openly and honestly about issues. Most important, model partnership relationships consistently at the senior levels of the organization.

3. Make sure that your organization is Delivering Results, by getting the basics right, first and foremost. That means the transaction processing, shared services, standard reporting, recruiting and other basic processes need to be efficient and accurate. Without this, the function has little credibility and should be focusing on getting its own shop in order. Take the same rigorous, results-driven approach to the higher value adding areas of functional expertise. And be sure you measure the results to communicate the importance of these achievements to your organization and to your partners in line management. The rest of the roadmap requires that this foundation be strong.

4. Prepare your functional team for Decision-Making on business issues. The best business partners are committed to the integrity of the decision process based upon an ability to bring clear business thinking to the table, coupled with an ability to facilitate good decision-making. This can be achieved through professional development that includes knowledge of the core business, facilitation skills, decision-making skills, and a deep functional knowledge, and it can be reinforced through rotation across functional boundaries.

A Final Thought

Large is the set of organizations for which the staff still performs a narrow set of specialized activities, or where there is a business partner structure without the spirit of collaboration to give it relevance. For these companies, achieving business partnership requires a deliberate decision and a sustained effort.

We have worked with organizations for which business partnership is so natural that they are not really aware of it and have no name for it. Staff functions and line operations work together, if not seamlessly then at least very collaboratively. They are unconsciously competent at business partnership and are surprised that everybody does not operate in this way.