Q If HR is the most powerful part of a business, why is its impact often felt in a negative way?

A At too many companies, the human resources department gets it wrong. Either it operates as a cloak and dagger society or a health and happiness sideshow. It rarely functions as it should. Yet what could be more important than who gets hired, developed, promoted or moved out the door?

Directors need to hire HR people with stature and credibility. They need to fill HR with people who are one part pastor—hearing all sins and complaints without recrimination; and one part parent-loving and nurturing, but giving it to you straight when you're off track.

They are relentlessly candid, even when the message is hard, and hold confidences tight. Pastor-parents earn the trust of the organisation but they don't sit around making people feel warm and fuzzy. They make the company better by overseeing a rigorous appraisal and evaluation system, and monitoring that system with the same intensity usually applied to Sarbanes-Oxley compliance.

HR should also create effective mechanisms, such as money, recognition and training, to motivate and retain people. And it should force organisations to face up to their most charged relationships, such as individuals who are no longer delivering results.

CEOs need to put their money where their mouths are and let HR do its real job—elevating people management to the same level of professionalism and integrity as financial management. Since people are the whole game, what could be more important?