How strategic is your HR department? (Guest Commentary)

Take a short quiz and find out where you rank

For decades we have been told that, in order to be taken seriously, individual HR practitioners, HR departments and the profession overall must become “more strategic,” yet many cannot articulate exactly what this means.

Some practitioners even argue the very survival of the HR profession is largely predicated on HR’s ability to deliver on its promise to become a strategic business partner — a promise that many, both inside and outside the profession, feel has largely been broken.

Many line executives do not even understand what the term “strategic HR” means. Above all else, “being strategic” for HR means meeting the needs of the organization’s senior management team and the needs of the organization overall. In other words, what strategic HR management actually looks like is highly dependent on the individual organization — there is no one-size-fits-all approach.

Strategic Human Resource Management, a fact sheet from the London-based Chartered Institute of Personnel and Development, defines strategic HR management as “a general approach to the strategic management of human resources in accordance with the intentions of the organization on the future direction it wants to take. It is concerned with longer-term people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future need.”

Where is the profession heading?

Managing Tomorrow’s People: The Future of Work to 2020, a report recently published by PricewaterhouseCoopers in London and reported on in the Sept. 22 issue of Canadian HR Reporter, predicts the HR profession is about to undergo fundamental change. PwC suggests three possible scenarios:

1. HR will truly become a strategic function and “the heart” of the organization, taking on a wider people role incorporating and influencing many other aspects of the business.

2. HR will become the owner and driver of corporate social responsibility within the organization.

3. HR will go back to being extremely transactional and almost entirely outsourced.

Clearly, some changes are required to ensure a future dominated by the first scenario. The second scenario is somewhat unlikely, given that many other stakeholders will continue to have input into the organization’s corporate social responsibility agenda in the future.

Of course, not everyone in HR will be in a position to function at a strategic level. Many highly skilled professionals in HR-related disciplines will continue to carve out a niche for themselves as specialists. While the overall direction the HR profession ultimately takes over the next 10 to 15 years is anyone’s guess, several trends are emerging that have the potential to radically transform HR:

HR outsourcing: The increasing scope and frequency of HR activities being outsourced is taking away some opportunities from HR practitioners, particularly for entry-level HR professionals and those primarily engaged in activities labeled as “transactional.” Increasingly, much of this type of work is being handled by call centres servicing multiple clients, often in offshore locations. Many of the people hired by such firms, even in North America, are junior employees with little or no HR background. This could effectively eliminate traditional HR career paths and many entry-level HR positions.

Line managers handling HR administrative tasks. “To some extent, every manager is an HR manager.” This cliché has never been more true. Many organizations expect managers to perform tasks previously handled by someone in HR, often through the use of new technologies such as manager self-service, HR intranets, compensation tools and even e-recruitment software. Managers are also increasingly expected to understand and resolve HR-related issues on their own or with minimal help from HR through “low-touch” means such as HR contact centres.

Increasing importance of people issues to CEOs and other senior executives. Chief executive officers spend a lot of time on people issues. However, this is a double-edged sword for HR — while it is comforting to know CEOs now see the strategic value of focusing on HR issues, this could paradoxically result in HR having less to do with issues of strategic importance. If the CEO takes on accountability for the people strategy of the organization, where does that leave the HR vice-president? A similar trend is the creation of new HR-related executive roles, such as a chief diversity officer, who often report directly to the CEO rather than to HR.

Increasing pressure to prove HR has a positive financial impact. HR is still a cost centre and is sometimes thought of as “overhead” or a “necessary evil.” This results in HR constantly having to justify its existence, at least when HR programs move beyond traditional hiring, firing and recordkeeping. If HR is to survive, it must be able to justify its existence through meaningful metrics that demonstrate in concrete terms the value of HR programs to the organization’s overall results. It may no longer be sufficient for HR to show line executives that time-to-fill recruitment metrics have improved. Executives want to know exactly what such numbers mean and how they affect the bottom line.

Most of the above trends point towards a future that is an HR practitioner’s worst nightmare — a return to the bad old days of transactional “personnel management” or, worse yet, a virtual elimination of the HR function. But this need not be the case.

In spite of the misconceptions surrounding the meaning of “strategic HR,” the profession needs to become more strategic if it is to survive.

That means being more focused on the needs of the organization and speaking and understanding the language of business, in finance, sales and marketing, business strategy, operations, statistics, project management, law and information technology.

How do you know if your HR department is operating at a strategic level? The questionnaire on the right can assist you in evaluating the HR department’s contribution to the link between corporate strategy and people strategy in your organization.

Brian Kreissl is the managing editor of Consult Carswell, a comprehensive online information tool for HR practitioners published by Carswell, a Thomson Reuters business and a sister product to Canadian HR Reporter. Judy Lutz is a product writer for Consult Carswell and Diane Giusto is a product development manager for the human resources and compliance strategic market group at Carswell. For more information, visit

Take The Quiz

Strategic HR questionnaire

Overall HR strategy

• Ensuring the HR strategy is created and revised in alignment with corporate strategy and the overall goals and objectives of the business — 20 points.

• Having HR provide input when crafting and revising the organization’s overall mission and values, and ensuring the “people side” is reflected — 15 points.

• Using one or more HR planning methodologies to proactively forecast the future demand and supply of labour, both inside and outside the organization — 10 points.

Senior HR executive

• Having the top HR executive report directly to the CEO — 20 points.

• Having a senior HR executive at the level of vice-president, senior vice-president, executive vice-president or chief people officer or chief talent officer — 15 points.

• Ensuring the senior HR executive is a member of the executive management committee — 10 points.

• Having a senior HR executive with formal education in HR — 10 points.

• Having a senior HR executive with an MBA or equivalent — 10 points.

Appointing a senior HR executive with both HR and line experience — 5 points.

Structure of HR

• Having a corporate HR department and HR business partner groups to support line functions — 10 points.

• Ensuring the majority of senior HR roles are staffed with candidates having education or experience in the HR profession — 10 points.

Recruitment and selection

• Having a formal recruitment strategy — 10 points.

• Having a formal employment branding strategy — 5 points.

• Being recognized as an employer of choice (such as Canada’s Top 100 Employers) — 10 points.

• Generally hiring the right candidates with the right skills — 10 points.

• Having an employee referral program — 5 points.

• Having an online careers site — 5 points.

• Having a formal policy stating the organization is committed to filling vacancies internally wherever possible — 10 points.

• Ensuring every candidate for a position is given a realistic job preview — 5 points.

• Implementing a formal onboarding or orientation program — 10 points.

Compensation, pensions and benefits

• Having a clearly articulated compensation philosophy — 15 points.

• Participating in annual salary surveys to maintain external competitiveness in the labour market — 5 points.

• Having formal salary scales or bands with minimums, midpoints and maximums — 5 points.

• Conducting job evaluations, at least for all key benchmarked positions — 10 points.

Having an executive compensation committee report to the board — 5 points.

• Having an employee benefits program — 10 points.

• Having a flexible benefits plan — 5 points.

• Having a pension plan or other retirement savings program — 10 points.

HR metrics and benchmarking

• Conducting an annual employee survey to create meaningful action plans — 10 points.

• Participating in external HR benchmarking initiatives (other than salary surveys) — 10 points.

• Producing meaningful HR dashboards including commentary, metrics and trends — 10 points.

Human resources information systems (HRIS)

• Having a fully functional HRIS with reporting capabilities — 10 points.

• Having employee self-service or manager self-service — 5 points.

• Using online tools such as e-recruitment and talent management software, compensation tools or online enrolment in flexible benefits plans — 5 points.

• Having a privacy policy governing the collection, use and disclosure of personal employee information — 5 points.

Training and development

• Instituting a tuition-reimbursement program with 100 per cent reimbursement — 5 points.

• Establishing a corporate university — 10 points.

• Implementing a formal leadership development program — 5 points.

• Having a formal training and development function — 5 points.

• Including learning and development plans as part of annual performance reviews — 5 points.

• Having return-on-investment metrics for training and development — 5 points.

• Surveying trainees and their managers on training satisfaction — 5 points.

Employee relations

• Having a comprehensive and fully compliant employee handbook or manual — 10 points.

• Using customized employment contracts for senior-level positions — 5 points.

• Having formal attendance-management programs and policies in place — 10 points.

Performance management

• Requiring formal performance appraisals at least on an annual basis— 10 points.

• Ensuring all employees are given ongoing performance feedback and coaching — 5 points.

• Having performance distribution guidelines (such as a predetermined percentage of employees who receive an exceptional rating in any given year) — 5 points.

• Instituting performance improvement plans for employees with performance issues — 5 points.

• Establishing a clear link between pay and performance in terms of bonuses, salary increases and identification of top talent for promotional opportunities — 10 points.

• Including goal setting as part of the performance management process, ensuring individual goals relate to the strategic goals and objectives of the organization by cascading goals to all levels — 5 points.

Talent management

• Having a formal retention strategy in place — 10 points.

• Instituting career-management strategies and programs — 10 points.

• Having a formal succession-planning process to identify potential replacement candidates for the CEO, executives, other key positions and hard-to-fill roles — 15 points

Work and lifestyle

• Having a flexible work policy covering such issues as telecommuting, flexible hours, job sharing and part-time work — 10 points.

Rating scale:

More than 425 points: Very strategic

330 — 424 points: Somewhat strategic

240 — 329 points: Somewhat transactional

Less than 240 points: Very transactional

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