Five Strategic Opportunities | Envisioning the New World of HR

The proposition that HR needs to focus less effort on transactional/administrative tasks and become more strategic in focus is not new. Over the past couple of decades, much has been written about transition to a strategic HR function (and, to be fair, in some organisations a great deal of progress has been made). Yet in too many organisations, the identity of HR remains firmly in the transactional/operational/advisory zones — comfort zones that often suit HR practitioners and line managers alike.

Yet the opportunities for a more strategic and value-adding contribution from HR are probably greater now than ever before.

Here are five opportunities that explain why:

1. Many Critical Organisational Issues are About People/Organisational Development

Some examples of these issues are as follows:

• developing organisational cultures that will adapt quickly to external change;
• performing despite economic downturn;
• raising organisational, team and individual performance year on year;
• improving customer service;
• delivering operational efficiency;
• securing business benefits from capital investment/strategic projects;
• attracting and retaining prized staff;
• reducing overall personnel-related costs/managing workforce costs more effectively;
• improving management 'bench strength';
• dealing with increased globalisation/scale/complexity in organisational life;
• increasing organisational flexibility;
• driving higher levels of employee engagement;
• improving the people management capability of line managers;
• encouraging and capturing innovations.

The list could go on. Hopefully, you will recognise the relevance of many of these issues to your business. The door of opportunity stands open for HR to be an active contributor in each of these areas.

2. Advances in Technology

There are now many major players that offer enterprise-wide technology solutions. This has enabled the HR function to make its business case for technological investment alongside other support functions, such as finance and procurement. Although there is still likely to be debate in each organisation concerning the extent to which Web-based HR will be adopted, there is now sufficient critical mass to give organisations genuine cost-effective alternatives. Additionally, the core HR Information System (HRIS) backbone offers in-built 'leading practices' in HR processes and the ability to apply solutions globally. HR not only has the opportunity to utilise technology, but now the means to make a convincing business case for this investment as well.

The creation of Web 2.0 and social networking provides HR with even greater opportunity to use technology to engage with people more effectively.

3. New Organisational Alternatives

In the past two decades, the management consultancy sector has grown rapidly, offering genuine alternatives to the in-house HR function. At the strategic end, consultants are increasingly stepping into the HR strategy and organisational development spaces where the in-house HR function either has insufficient capacity, or lacks sufficient capability to make a full contribution. At the operational level, there are now many sourcing alternatives in the areas of recruitment, training and development, reward, HR policy development, etc. At the transactional/advisory end, there are now serious players offering HR outsourcing, not just from a technological infrastructure/transactional perspective, but increasingly pitching at a full service handling back office recruitment, learning and HR decision support/advisory functions. 

4. Research Linking Developed People Management Practices and Performance

There is now a growing body of research linking progressive people management practices to superior organisational performance. For example, found that firms with the greatest intensity of HR practices that reinforce performance had the highest market value per employee. Their thesis is that improving HR practices can impact enterprise market value quite significantly. Their conclusions are hugely challenging for organisational leaders: that the best firms achieve strategic and operational excellence in HR.

5. Clearer Functional View on What a Strategic Contribution Means

The emergence of the HR management movement and the contributions made by academics (and especially Dave Ulrich) have helped HR find a greater sense of identity. The HR roles set out by Ulrich (see Figure 1) have found resonance within the HR community, and have become the starting point in exploring what business partnership means for HR.

 

Figure 1: HR roles.

Whilst the above developments suggest that there are some clear opportunities for HR, the challenge for each HR function is to define for itself a way of making a value-adding contribution that is right for its organisation. In a nutshell, there are no 'off-the-shelf' solutions, and unless HR is clear about the way it can add value, the threat is that the business will turn elsewhere for that contribution and the in-house HR function will become insignificant and impotent.

It is also true that aspiring to be in the top two quadrants of the Ulrich model without delivering effectively in the transactional/administrative area will not give HR business partners sufficient credibility with line managers for there to be a serious conversation around strategy and change. HR functions must still deliver on the basics if value is to be added and credibility gained.