A new approach, a new capability: The strategic side of Human Resources

Increased competition, changing workforce demographics and a shift toward knowledge-based work are requiring companies to place an increasingly higher priority on improving workforce productivity. Organizations are now looking to the Human Resources (HR) function to go beyond the delivery of cost-effective administrative services and provide expertise on how to leverage human capital to create true marketplace differentiation. Facing these challenges, many HR organizations have been actively revamping to more effectively deliver the strategic insights the business requires.

“If HR does not force its way into the heart of strategic planning in organizations, it will default to a technical and transactional dead end.” ¹
— Helen Drinan, former president and CEO, Society for Human Resources Management

Improving the strategic capability of the HR organization is not, by itself, a new idea. Spurred on by leading academics such as David Ulrich and Edward Lawler, organizations have worked for the better part of the last decade to build more strategic capability into their HR departments.² However, the perceptions of many HR personnel and their internal customers suggest that most have not reached this goal. A survey by the Society for Human Resource Management indicated that only 34 percent of executives viewed the HR function as a “strategic partner.”³ A similar study from the Chartered Institute for Personnel Development in the UK found that 56 percent of HR professionals aspired to become “strategic partners,” yet only 33 percent currently perform this role.⁴ These findings, coupled with our research, suggest that the migration toward a more strategic HR organization remains, for many companies, a work in progress.

Competing in today's environment requires companies to focus on building a more responsive, flexible and resilient workforce. To do so, organizations must do a more effective job of sourcing talent, allocating resources across competing initiatives, measuring performance and building key capabilities and skills. HR organizations that provide strategic guidance on these issues can become proactive drivers of organizational effectiveness, rather than simply a supporter of these efforts.

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References

¹ Jamrog, Jay J. and Miles H. Overholt. “Building a Strategic HR Function: Continuing the Evolution.” Human Resources Planning. January 2004.

² Ulrich, Dave and Wayne Brockbank. The HR Value Proposition. Harvard Business School Press. 2005; Lawler III, Edward E., and Susan A. Mohrman. “Creating a Strategic Human Resources Organization: An Assessment of Trends and New Directions.” Stanford University Press. 2003.

³ Jamrog and Overholt. January 2004.

⁴ Chartered Institute of Personnel and Development. “Business Partnering: A New Direction for HR.” 2003.