Is HR function becoming ineffective?

Preoccupation with costs making HR lose sight of value in wider business: Study
|hrreporter.com|Last Updated: 10/16/2012

The value of the HR function elicits sharply contradictory views within organizations. While the war for talent is understood to be crucial to almost every business, the HR function is often dismissed as non-essential or ineffective, according to a study from KPMG International.

In the last several years, there has been a preoccupation with cost optimization, cost reduction, sustainable cost management and this has required HR to play its part, largely through making the HR function more efficient — but not necessarily more effective, said KPMG.

With this relentless focus on costs, many HR functions have lost sight of how they can generate value in the wider business, said Rethinking Human Resources in a Changing World based on a survey of executives by the Economist Intelligence Unit.

This is a significant issue given that the people agenda at most organizations contains business-critical issues and challenges such as:

•the war for recruitment and retention of top talent

•the engagement of a global workforce operating within a more fluid environment

•ensuring the people profile matches the value drivers of the business

•the smart use of technology to support both the business and its employees

•drawing predictive insights from complex sources of data to ensure the agility of the organization.

About eight in 10 (81 per cent) respondents said putting in place the most effective talent management strategy will be key to competitive success.

Six in ten (59 per cent) believe HR will grow in strategic importance, however, only 17 per cent maintain HR does a good job of demonstrating its value to the business, found KPMG.

Meanwhile, the forces of globalization, talent constraints and new technology are driving rapid change to the HR function. More than one-half (55 per cent) of survey respondents believe the metrics that define the success in HR today will fundamentally change over the next three years.

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