Separating transactional from strategic HR not cut and dry

‘Mundane’ tasks often key to strategic success, sought-after executive laurels

As early as the 1960s, practitioners and academics were concerned that human resources would become irrelevant if HR professionals did not highlight HR’s contribution to the performance and bottom line of the organization.

Although it took some time, HR found the solution and introduced strategic human resources management. Strategic human resources management places the practice of HR on a pedestal, highlighting its relevance and contribution to organizational effectiveness.

One consequence of the advent of strategic human resources management is the bifurcation of HR functions into “strategic” and “transactional.” The consensus is that human resources management must forego, share, de-emphasize or outsource transactional functions and concentrate on the strategic ones. The argument is that these transactional functions limit the role of human resources practitioners to reactive and firefighting activities and therefore prevent the positioning of human resources professionals as strategic business partners.

However, there are certain challenges that flow from that proposition. In fact, these challenges could be the reason why some human resources departments are not progressing beyond the talk of becoming strategic business partners.

Transactional functions are not all equal in importance. Some (although not all) of the human resources functions that have been labelled transactional are intertwined with the strategic functions. In some ways, these transactional HR functions are prerequisites for attaining HR’s strategic objectives. While these functions may not be strategic, per se, they could affect the outcome of strategic initiatives. In other words, there are some transactional functions that must be effective before certain strategic objectives can be attained. It is therefore important for human resources practitioners to identify and manage those transactional functions accordingly.

Consider a scenario in which the company’s strategic human resources recruitment plan was being developed, with input from the line managers. The plan was important to the organization and would have enhanced the role of HR as a strategic business partner. An evaluation indicated that the strategic recruitment plan was not achieving its objectives. The problem was not with the plan, but rather the turnaround time for processing recruitment requests. By the time candidates were contacted for interviews, they had accepted other offers.

This scenario is being played out in many HR departments, illustrating how transactional inefficiency can undermine HR’s ability to make strategic contributions. Similar scenarios can be found in employee relations, compensation and labour relations. The effect of such miscues is that senior management will not entrust a department with the bigger responsibilities of strategic human resources functions if it is unable to efficiently complete the mundane.

One approach to managing transactional functions that are essential to strategic functions is to integrate them into the strategic process. HR practitioners should consider the transactional functions as part and parcel of the strategic functions. Human resources practitioners need to continuously identify and manage these transactional functions at a higher level. For each strategic HR function, transactional functions that may have an impact on its outcome should be identified and integrated at the planning stage. The integration would enhance the effectiveness of strategic functions. The approach would ensure that HR practitioners are effectively managing the connectivity of both functions.

Ultimately, because these transactional functions directly impact many strategic HR functions, they should be reclassified as “sub-strategic human resources functions.” The outcome is elevating certain transactional functions above certain other “pure” transactional functions.

This is one of the important disconnects between HR discourse and real-life HR practice. The hope is that HR practitioners, who are experiencing challenges in de-emphasizing some transactional functions because of their importance to strategic functions, will start relating to the functions as part of the larger strategic picture.

Kunle Akingbola is an HR consultant with Toronto Rehabilitation Institute.

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