Every three years since 1995, my research center has done a survey of how the HR functions in major corporations are operating. The just-published results of our 2010 survey are in my new book, Effective Human Resource Management: A Global Analysis. The results clearly show what HR needs to do to become a key strategic force in major corporations. But, and it is a big but, they also show that HR is not doing what needs to be done. This is in spite of the fact that now more than ever, the time is right for HR to play a key role in business strategy development and implementation.
HR appears to have some influence when it comes to how staffing relates to strategy and how organizational structure relates to implementing strategy. But our results suggest that HR plays a less prominent role when it comes to the development of strategy, the consideration of strategic options and other strategy areas, including acquisitions and mergers.
A number of HR practices and programs are significantly associated with a stronger strategic role for HR, including:
- Having an HR strategy that is integrated with the business strategy
- The use of information technology
- Focusing on HR talent development
- Having HR activities that focus on organization design, organization development, change management, employee development, and metrics
- Using computer systems for training and development
- Having effective HR metrics and analytics
- Having an HR staff with technical, organizational dynamics, business partner, and metrics skills
Helping to set and implement the strategic direction of the organization requires developing and assessing the organization's human capital and creating the organizational capabilities required to support the strategic direction. It also requires shaping strategy by providing the unique perspective available via the lens of someone who has knowledge of the talent market and human behavior. This requires HR executives to understand business strategy and how it relates to organizational capabilities and core competencies and how those connect to pivotal talent and organization design decisions. In this role, HR executives need to use their knowledge to help the organization set its strategic direction and develop its business plans in ways that are consistent with a talent decision science.
Overall, being a strategic contributor demands that high levels of business knowledge and skill be present in HR. It also requires information systems that have the right metrics and analytics, and organization designs and practices that link HR managers to business units. Last but not to be overlooked is the need for the effective and efficient delivery of HR services. Providing good services is the price of admission; if HR cannot operate effectively as a mini business, it is hard to convince others that its input on business issues is worth anything.