How can HR play a strategic role in today’s business environment?

The 2005 IBM Global Human Capital Study reported that the top three initiatives for Chief Human Resource Officers in response to CEO priorities were organization transformation, people development and talent management.

If these expectations need to be met, HR must move away from its transactional role to a more strategic role. HR can play a more strategic role by focusing on the following areas:

1.Measuring the Right Metrics

Monthly HR reports continue to reflect typical yardsticks of measurement such as training hours per employee, costs per hire, days taken to fill a position. Yet, the more meaningful metrics should be usefulness of training as measured by knowledge gain, application to job to networking, ROI on identified high performers and recent hires or an organization’s ability to meet with the changes in the market place (in terms of frequency of new ideas embraced, accepted or even raised?) It is equally important to discuss the quality of the hire along with the cost per hire and time to fill? It is important to understand what has the most economic impact? While efficiency may be an important parameter, it is up to HR professionals to convince senior management to focus on quality and value.

What is also important while developing metrics is whether the senior management is in agreement and believe that the results of the metrics would be an indicator of business performance. (Refer Resources to read Dr. Sullivan’s list of 47 key metrics )

2. Managing Talent

Preparing for the business needs of tomorrow depends on identifying (as well as recruiting and training) the right tomorrow. Many CEO’s are of the opinion that businesses need to fundamentally alter the way they operate if they need to succeed in business tomorrow. If so, HR will have to play an effective role as a partner to anticipate these needs and to ensure that smooth transitions happen, that organizational changes are effective. 

Koichiro Nishikawa, Hitachi’s executive officer for business development identified the growing trend on employee loyalty,” many of these people identify more with others in their field of work or study—whether as coders, computational biologists, designers or educators—than they do as employees of the organizations hiring them for these roles.For some people, the passion may be more for the chip itself than for a Hitachi, a Samsung or an IBM. But that’s okay—it’s also an opportunity to motivate and reward people in new ways.” (in the IBM Global Innovation Outlook 2006 study –refer resources) 
The need to retain and attract talent, manage an ageing workforce, manage contract and self employed workers and manage fleeting loyalties is acknowledged as the challenges of employee management.

HR has to ensure that it manages the processes involved in these areas well. It is also the responsibility of HR to highlight how these changes in the workforce can have a significant impact on the organization and take initiative to plan for these changes. 

3. Monitoring trends and connecting the dots

Pepsi believed that it needed to push for diverse leadership in order to help understand the tastes of new consumers. In order to do that, since 2001, former CEO Steve Reinemund enforced an aggressive hiring and promotion plan that required half of its workforce to be women and minorities. Bonus structures of managers were tied to their ability to hire and retain such talent. As a result, today, six out of Pepsi's top 12 executives are women or minorities including current CEO Indra Nooyi. 
What role can HR play in convincing senior management to look at such trends and discuss its impact in shaping recruitment policies? More importantly, can the CEO rely on its HR department to provide meaningful trends to discuss and debate at the top level? 
Policies don’t get shaped in isolation. HR can play an instrumental role to ensure that there is continuous dialogue to evolve such forward looking policies. 
 

4. HR and technology

While technology has enabled HR to outsource most routine responsibilities’, it continues to largely restrict itself to payroll, training and employee services. The impact of the more recent technologies such as wikis and weblogs is still negligible.

It is only HR that can do a lot to spear- head new initiatives and demonstrate its value using these technologies in areas such as employee learning and employee empowerment. If employee empowerment, collaboration, networking and innovation are going to be dominating factors that will enable organizations to succeed, then HR today has the right tools available to leverage and build organization capabilities in these areas, which in turn impact business performance. 

Today, when discussions around HR’s strategic role are debated, it often focuses on the issues such as to whom does HR report to (CEO or CFO) and whether HR is invited to discussions that are strategic in nature. However, to ensure a seat at the table, to quote Jan Capps, VP- HR for North America at Syngenta “HR must be physically fit as a function. The CEO must have confidence in and respect for the [HR] function.”  

On the other hand, Bob Nardelli, CEO, Home Depot believes that not having a Head of HR is like, "like trying to run NASA without a head engineer." ( which was the case when he first arrived at Home Depot from GE). At Home Depot, Dennis Donovan, head of HR “advises on nearly every executive decision, from new store sites (are there enough workers nearby?) to marketing (can the company's hot NASCAR sponsorship be used to reward top employees?).”  

The opportunity to see this happening in more organizations is now! 

Resources: 


http://www-935.ibm.com/services/us/bcs/pdf/g510-6285-00-how-human-resources-keep.pdf

https://www-5.ibm.com/webutils/sendmail.pl?form_cfg=/services/uk/strathr_form--strathr_form_form

http://www.shrm.org/hrmagazine/articles/0605/0605covstory.asp