hile the last 10 years have seen progress in HR’s quest to become strategic business partners, achieving higher status is painfully slow, a new survey of Canadian HR professionals shows.
Of the almost 200 Canadian organizations surveyed by Deloitte Consulting and the University of Toronto’s Centre for Industrial Relations, 41 per cent of HR leaders describe their departments as strategic partners, while 31 per cent still view themselves as administrative experts. Another 15 per cent said change agent best describes their department while 13 per cent felt they are primarily employee champions. The survey was compared to a similar study completed in 1994.
While most senior HR leaders participate in all management committees, just 57 per cent said the most senior HR person reports directly to the CEO or equivalent, down from 60 per cent in 1994.
Ted Mock, a PhD student at the Centre for Industrial Relations who helped design the study, said it is clear HR’s progress toward becoming more strategic and less transactional has been slow. “There hasn’t been as much change as we thought there might be,” he said. “A lot of (HR people) still view themselves in the typical administrative type role.”
Part of the problem for many HR professionals is that they are being pulled in two directions at once, said Stephen Diotte, a senior partner at Deloitte Consulting.
At the same time chief executives want senior HR leaders to be partners in strategic planning, front-line managers and employees are more interested in good personal service with the traditional HR administrative responsibilities.
“HR has an interesting dilemma,” he said. “On the one hand there is big pressure from the C-suite for HR to be more strategic. But there is all this pull back to be transactional. Rank-and-file supervisors and employees value that personal service.”
This could be one of the reasons so many HR professionals still say theirs is mostly an administrative function, he said.
That is not to say HR can’t become more strategic, said Diotte. HR leaders have to find out what is keeping CEOs awake at night and then find ways of making the changes to address those fears.
One problem for many HR departments is that they try to introduce dramatic, sweeping changes that fail because employees don’t like dramatic change, he said. There is little urgency with these initiatives; they can be done incrementally, he said.
HR executive participation on key organizational committees is one of the best indicators of how much of an impact HR has, said Mock.
“Organizations where the HR managers get out of HR and get involved with the executive committees — those are the organizations that tend to have more success in getting HR issues onto the corporate agenda.”
Mock, who was an HR manager for 18 years, said he was also surprised at the demand for HR-related graduate degrees at many organizations. There appears to be an unfilled need for masters-level degrees in HR or industrial relations that are mostly being filled by MBAs, he said. And while the CHRP isn’t seen as a prerequisite for executive level jobs, it is a regular requirement at the manager and supervisor levels, he said.
“Another surprise to me is that more organizations haven’t adopted more HR performance metrics,” said Mock. Metrics are the crucial tool for HR leaders to prove they can make a strategic contribution to their organization, he added.
The survey found that just one-third (34 per cent) of respondents employ HR-specific performance metrics for planning and managing organization-wide HR effectiveness and efficiency. This figure is similar to the percentage found in 1994. Of those who use these metrics, efforts tend to be focused on measures such as lost time (16 per cent) and productivity (14 per cent).
Many organizations just aren’t interested in spending the time or money on measuring HR, said Diotte. “It’s not what companies want to spend their money on — measuring the performance of the HR function. It’s not a priority for the C-suite.”
Most Canadian HR departments are in medium-sized companies. In those organizations, the HR function is going to be mostly transactional and have little need to introduce comprehensive metrics, he said.
The survey also showed companies have been slower to spend on HR technology than was expected 10 years ago.
“We thought there would be significant investments in HRIS and that investment has not occurred,” said Diotte.
Through the 90s a lot of companies made significant investments in ERP systems. “It has taken them longer than they thought to realize the benefits, and as a consequence it is taking them longer to take the next step.”
Organizations are either going with vanilla systems or buying just basic payroll systems to keep costs down. This is could explain why some HR departments are struggling to prove they have strategic value. “They are being more cautious about the modules they buy,” he said.
“Some of the (modules) we would argue have more strategic value such as performance management or succession planning or some of the recruitment modules, but the return isn’t immediate.”
This is the case for the most coveted module in many HR departments: employee self service. “It hasn’t gone as far we thought it would,” he said.
However, at Toronto-based Progistix, vice-president of HR Steve Phinney said that employee self service, implemented through the company’s SAP HR system, has been instrumental in reducing the amount of administrative work. Aside from payroll activities, about 25 of all the work done in his department is administrative, he said.
So far, they haven’t encountered much resistance from the company’s 800-plus employees. The opposite is true. “More people are saying give me more control of my own activity.”
He said HR departments may be slow to reduce administrative work through self service, not because employees don’t like it, but because HR can’t make the business case. “It is not cheap,” he said of the cost of the technology necessary for employee self service. “You have to put the business case together and say this is where the returns are going to come from. And this is where it is going to benefit the organization.”
“We put together a business case in terms of what it costs us to do a transaction versus what it is going to cost us to do a transaction in the future. It was at least 50 per cent less.”
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