How do we know if we’re strategic? (Guest commentary)

Individual components of HR may not be strategic, but composite effects on manager effectiveness and employee experience are powerful

There’s a common message repeated in many articles on human resources, coming from HR practitioners and business leaders alike: “HR is a strategic partner.”

And yet, less than one in four firms actually link HR metrics to key business outcomes, according to the 2010 Human Resources Trends and Metrics study by the Conference Board of Canada. It would seem, then, there is still work to be done when it comes to being a strategic partner.

So is the HR function strategic? Review each element of human resources (recruitment, pay and benefits, training and career advancement, employee motivation and performance, manager support in people management, workplace safety and employee departure) and, in most cases, while the HR function is essential to the efficient operation of the business, it is probably not strategic.

However, what is undoubtedly strategic are the composite effects of the HR function to enable a differentiated employee experience and effective management of an organization’s talent. As such, it is the design and measurement of the HR system that are strategic, as well as the effectiveness of the HR function in the execution of the HR system.

For the HR system to be strategic, all elements must be designed to:

• foster an environment that is attractive to future and present employees

• support managers in their management of people

• manage both labour costs and HR operations in a manner that helps realize profitability.

Making HR function effective

If the key to HR being strategic is for the HR function to be effective, how can it best realize this? There are a number of ways the HR function can assess and address its effectiveness, including:

Effective recruitment: The top three HR needs identified by organizations are recruitment (66 per cent), leadership (46 per cent) and retention (43 per cent), according to the Conference Board study.

If a company is recruiting people because of turnover, the first step is for HR to address the issue of why people are leaving. Failure to address turnover is the number one reason recruiting is considered ineffective. When people resign, an immediate talent gap is created. At the same time, recruiting talent takes time since good people are working elsewhere and often not looking for opportunities. Also, good people recognize the warning signs when a company is in a rush to hire people because of turnover.

Once HR addresses turnover issues, it can then execute excellence in recruiting through the identification and attraction of great hires. When great people are hired, “time to hire” or “cost per hire” concerns are rare.

Effective pay and benefits: The administration of pay and benefits has often been outsourced. So, for the HR function to be effective, it needs to ensure pay and benefits support the business. As such, HR should regularly monitor pay, bonuses and increases and make recommendations to managers to address compensation that is too high or too low. On the transactional side, changes in pay (salary increases, bonus payments and promotions) or benefits (as a result of status changes) require administrative, operational efficiency comparable to going to a bank. When a change is made, people want acknowledgement of the request, notification the change has been processed and confirmation of when the change will be reflected.

Effective training and careers: Business success is dependent upon employees having the right skills for the job. In this respect, HR can play a vital support role in sourcing employee training to address skill gaps. But HR can go beyond just addressing immediate training needs by forecasting and developing future talent and supporting employees’ career growth. Sixty per cent of public sector employees and 50 per cent of private sector employees have formal learning and development plans, according to the Conference Board study, so this appears to be a role where HR is delivering.

Management support and employee motivation: One of the core competencies of HR is to be specialists in the understanding of people when they train and coach managers and develop people processes that motivate employees. For the HR function to be effective, it needs expert knowledge in motivation, work design and leadership. With that in hand, HR managers can monitor the people-management skills of managers and play an active role in the development of managers. When HR managers fail to have, or use, this expert knowledge of people, HR’s role is neither strategic nor effective but, rather, administrative.

Another critical area is the development of processes that effectively motivate employee performance. The HR function must continuously ask whether programs designed to motivate employees actually deliver. Programs that don’t deliver, or don’t support an organization’s goals, should be changed.

Workplace safety: Workplace safety is not just good business, it’s also the law. Sometimes, however, more effort is exerted in managing and attending workplace safety meetings than actually identifying and addressing safety risks. And workplace risks are not just the obvious dangers — subtle health risks are often even more important. Is someone’s work repetitive in a way that will eventually cause injury? Does the work environment foster behaviour or language that could be considered as psychological abuse or sexual harassment? An effective HR function monitors and manages the work environment to address all risks to physical or psychological health.

Employee departure: With the departure of an employee, a company assumes risk. This risk comes in the form of potential litigation from former employees, the potential for an employee to share trade secrets with competitors or employees negatively impacting the company’s image through word of mouth. The Internet makes it easy for employees to communicate with the entire world and gain a sympathetic ear.

The risks of departure can be managed through effective delivery of all of the previous HR functions to ensure employees leaving the company do so having had a positive experience. Through effective HR delivery, organizational strategy is supported, managers are supported and employees leave their jobs with nothing but good things to say to future customers and employees.

Angus Duff is a lecturer and PhD student in human resource management at York University’s School of Human Resource Management in Toronto. He can be reached at [email protected].

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