In praise of transactional HR (Guest commentary)

In our drive to be seen as more strategic, are we guilty of ‘dumbing down’ many traditional aspects of the HR profession?
By Brian Kreissl
|Canadian HR Reporter|Last Updated: 02/21/2008

For years now, HR professionals have been encouraged to be more strategic in our thinking, in our approach to the profession and in dealing with executives and professionals in other functional areas.

Textbooks and articles tell us, to be taken seriously, we must become “strategic business partners” by aligning ourselves more closely with the needs of the business. We are also told, if we are to take HR to the next level, we need to align the people strategy with the overall strategy of the organization. Only at that point will we truly have a seat at the table and be taken seriously as a profession.

Every one of these theories makes a whole lot of sense when considered from the perspective of the HR profession overall. Or at least from the vantage point of the senior HR professional who is in a position to have real and meaningful input into the organization’s overall strategic direction and who can create and implement policies, practices and programs that help the organization achieve its overall strategic goals and objectives.

I am not saying every senior HR professional is actually functioning at a strategic level. Nor am I saying only senior HR practitioners ever get to touch anything remotely strategic. Obviously some roles and tasks are more strategic than others. However, there is not a strict strategic versus transactional dichotomy, but rather a continuum. Even a chief executive officer has certain aspects of her role that are highly transactional.

Where, then, does that leave the rest of us? Not every HR professional can be, should be or even wants to be functioning at a strategic level. In just about any organization, there are only so many truly strategic HR positions. There is also plenty of room in the profession for talented generalists and specialists in non-strategic areas.

Strategic focus has side effects

The desire to make the profession more strategic has had many positive outcomes for HR professionals. However, this focus has also had some undesirable effects.

Many things that aren’t strategic in nature are incorrectly labeled as such, often resulting in ridicule from those outside the profession. One example of this is the infamous August 2005

Fast Company

article by Keith Hammonds entitled “Why We Hate HR.”

That particular article was highly critical of the HR profession for not delivering on its promise to become a strategic business partner. While it was dismissed by many HR practitioners and academics as making unfair generalizations about the profession based on outdated stereotypes, unfortunately many of those criticisms are heard far too often — both outside and inside the profession.

Some within the HR profession feel the need to be strategic means they need not bother with important details and they can sound sophisticated by using lots of buzzwords and baffling people with empty phrases no one really understands.

These people are in the minority, and again this is a stereotype, yet deep down we all know such HR professionals exist and their behaviour gives the HR profession a bad name overall.

Is ‘transactional’ a dirty word?

Since everyone wants to be strategic, “transactional” has become a dirty word in the vocabulary of the HR professional over the past few years. At times it feels as if the message to those tarred with the “transactional brush” is “be strategic or perish.” Yet, this need not be the case.

There is a perception within HR that if you are not doing strategic work, you must be junior. In fact, there are many experienced, highly skilled senior people in HR doing work that is non-strategic but of vital importance to their organizations.

Taking the employee relations function as an example, at least in the non-union context, there are probably only one or two people at the director or vice-president level in most large organizations responsible for creating and revising employment policies in line with the overall HR strategy.

Typically, employee relations consultants are then responsible for interpreting those policies, which must be looked at in conjunction with the relevant case law, legislation and best practices. In some organizations, these consultants are even qualified employment lawyers or senior HR practitioners with masters’ degrees in industrial relations. Such consultants often prepare severance packages, enter into negotiations with employees and even represent the employer in courts and tribunals. Many people do not think of this type of work as being “transactional” and these consultants would hardly be considered “junior” in any sense of the word, yet this is not strategic work.

Another example is the compensation function. While an organization’s total compensation strategy is most likely developed by the most senior HR executives, probably in consultation with the CEO and chief financial officer, others will most likely perform such functions as job evaluations, preparing and conducting salary surveys, ensuring compliance with employment equity and running base pay reviews and incentive pay programs.

Again, the individuals involved in such work are usually well paid and often have many years of experience and specialized training, yet most of their work is not strategic.

Pin some of the blame on outsourcing

Outsourcing may be partially to blame for this mentality in HR. Part of the problem relates to the entire rationale for HR outsourcing — that taking away the non-core or non-strategic aspects of human resources management allows the HR department to focus on strategic value-added activities that contribute to the bottom line.

This can have the effect of deskilling many transactional HR activities. At times, HR outsourcing companies are even guilty of “dumbing down” the work they perform when they market their services to potential clients.

For a significant part of my HR career I worked for a large financial institution, starting as a recruiter, eventually moving into a compensation administration role. Soon after starting in this new role, I found myself outsourced to a company based in the United States specializing in HR outsourcing (this particular firm no longer exists, having eventually merged with a larger HR consulting firm and outsourcing provider).

After transitioning to the new employer, I kept the same job, performing the same duties for the same clients. What did change to a large extent was the culture of the organization and the attitudes towards the work I was doing.

Soon after my transition, an article was written about the outsourcing deal with the bank. What was upsetting was the way the article described the deal. It said the bank had outsourced the “more mundane” aspects of HR to the external provider. The language used by the outsourcing provider added to this insult — internal communications constantly referred to what we did as “processing.” That suggests the vast majority of those who were outsourced spent their workdays sitting at their keyboards doing data entry.

In fact, nothing could be further from the truth. The people who were outsourced included senior recruiters with highly specialized knowledge and experience, employee relations consultants, benefits administrators, payroll managers, senior software developers, HRIS specialists, project managers and business analysts. Several of these individuals had completed, or were pursuing, graduate degrees, the Certified Human Resources Professional (CHRP) designation or other specialized designations.

My own job involved doing business analysis, working with software developers, and liaising with payroll, employee relations, corporate compensation, finance, HR program managers and the program administrators in the line. I was also co-facilitating training sessions, interpreting compensation and employee relations policies of the client organization, and ensuring payments totaling several million dollars, in two different currencies, across several legal entities, were paid in an accurate, timely manner.

While this work was hardly strategic, I would not describe it as “processing” or “mundane.”

Imagine how demotivating such descriptions are to conscientious, well-educated, ambitious HR professionals, whether the work they are doing is considered strategic, transactional or otherwise.

Outsourcing HR is not a new phenomenon — companies have been outsourcing at least some functions on the periphery of what could properly be termed human resources management for decades, such as payroll, pensions and benefits administration and employee assistance programs. In the past few years, however, HR outsourcing has increased in both frequency and scope. As many organizations turn to external providers, and as HR professionals strive to be more strategic, this type of thinking is likely to continue to be pervasive.

It is one thing to outsource payroll and the administration of benefits plans; it is quite another to outsource employee relations consulting, recruitment, compensation and training and development.

The message is the problem

I am not saying the HR outsourcing industry does not provide value. Nor am I saying this kind of mentality does not exist in organizations that have not outsourced HR to any significant extent. Instead, I am only criticizing the way outsourcing services are often marketed and the way such messages contribute to the overall dumbing down of non-strategic activities within the HR profession as a whole.

Sure, in spite of all of this, most HR professionals still aspire to strategic roles. As a profession, we must continue to strive to make it more strategic and to gain the respect of other professionals and senior managers in our organizations.

All I ask, however, is to think of those in transactional roles that are often seen as less glamorous. Many of them are in these types of roles either because they enjoy them or they are at a certain stage in their careers. Some roles within the HR profession are not strategic in any meaningful sense, yet they still require high levels of skill, knowledge, responsibility and effort.

Ban one ‘T’ word, create another

Perhaps we should think of banishing the dreaded “T” word, which has taken on far too many negative connotations within the HR profession. Could transactional not be replaced with something with a more positive spin? Tactical is another “T” word that goes hand in hand with the word strategic.

Brian Kreissl is managing editor of Consult Carswell, a comprehensive online HR service centre. He can be reached at brian.kreissl@thomson.com. For more information about Consult Carswell, visit www.consultcarswell.com.

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