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Despite the compelling arguments that human resources management is a key strategic issue in most organizations, there is good reason to believe that, historically, human resources executives have not been and are not now strategic partners. Instead of being headed by strategic partners, the human resources function has been largely an administrative one headed by individuals whose roles are largely focused on cost control and administrative activities (Lawler, Mohrman, & McMaha, 2000).
The strategic role of a firm's HRM system has become the focus of empirical investigation somewhat more recently. Other strategic HRM activities include team-based job design, flexible workforce, quality improvement practices, employee empowerment, studies designed to diagnose a firm's strategic needs, and planned development of the talent required to implement competitive strategy and achieve operational goals. For these strategic HRM activities, there is little shared understanding about how to achieve effective implementation, and there are few regulatory guidelines (Huselid, Jackson, & Schuler, 1997).
In order to be a strategic partner, the human resource function needs to be structured and staffed in a way that provides it with access to strategic discussions and decision making. The human resource function must change from a specialist role to business partner roles. This change starts at the top of the organization and means that the head of human resource function needs to be part of the senior management group. (Lawler, 1995) In addition, HR Departments must be held to a higher standard than they have been up until now. They must move their HR professionals beyond the roles of policy police and regulatory watchdogs to become partners, players, and pioneers in delivering value (Ulrich, 1997).
HR: Administrative or Strategic?
Even though there is evidence that the situation is changing and that human resources function is beginning to redefine its role, a research by Lawler and Mohrman (2003) indicated that from 1995 to the latest survey, HR only spent about 23% of its time on the strategic role and the administrative role only decreased slightly (Lawler, & Mohrman, 2003).
Even though the approach of changing the role of HR function to become a strategic partner started over two decades ago, HR managers and executives in most organizations spent only less than a quarter of their time on the strategic role. My hypothesis is that strategic HR practices are still contemporary concepts, very difficult to measure, and there are only a few established guidelines that demonstrate an effective implementation of these practices. Many HR experts and researchers indicated that HR is not playing a major strategic role in most organizations because HR is not aligned with strategic planning of these organizations. In this research I will go through the major factors that contributed to this issue, also I will discuss number of the effective approaches offered by HR experts in order to redefine human resources function and transform it from an administrative role to a strategic one.
Roles of Human Resources
Several roles can be fulfilled by HR management. The nature and extent of these roles depend on both what upper management wants HR management to do and what competencies the HR staff have demonstrated. Three roles are typically identified for HR: (Mathis & Jackson, 2008)
â- Administrative: Focusing on HR clerical administration and recordkeeping
â- Operational and employee advocate: Managing most HR activities in keeping with the strategy that has been identified by management and serving as employee "champion"
â- Strategic: Helping to define the strategy relative to human capital and its contributing to organizational results
Most organizations view the department of Human Resources (HR) as an administrative function and ignore the need and opportunity to align it with its strategic plans. In circumstances where HR is included in the strategy of an organization, its alignment does not go beyond a forecasting function. The main reason that HR is not aligned with the strategy of an organization is that it does not hold a seat at the strategic planning table. The irony with HR being left of out of strategy planning is that by its nature, HR is about people, which is the core of an organization and its strategic plan (Righeimer, 2004).
Studies of large corporations which focused on a cross-section of firms found that the major focus of most human resources functions was on controlling health care costs and on a host of other administrative issues. Missing almost entirely from the list of issues were such key problems of organizational performance as improving productivity, increasing quality, and improving the ability of the organization to bring new products to market. Since it is likely that the organization saw these areas as important, we must ask why they were not the most important one for human resources executives. Most likely, the executives in these firms simply felt that the human resources function could not have an impact on these problems (Lawler, Mohrman, & McMaha, 2000).
Changing Roles of HR Management
The administrative role traditionally has been the dominant role for HR. However, as Figure 1 indicates, a significant transformation in HR is occurring. The HR pyramid is being turned upside down so that significantly less HR time and fewer HR staff are used for clerical administration. Notice in Figure 1 that the percentage of emphasis on the operational and employee advocate role is remaining constant. The greatest challenge is for HR to devote more emphasis to strategic HR management. A study by Towers-Perrin, a large consulting firm, found that HR is being pressured to change because of four critical business issues identified by senior HR managers: cost-reduction pressures, business restructuring, broad-scale downsizing/layoffs, and globalization of business (Mathis & Jackson, 2008).
Source: (Mathis & Jackson, 2008)
Aligning HR with strategic planning
Describing the new human resources role and new competencies are only the first steps in transitioning to a strategic business partner. The human resources function has been organized to carry out an administrative function. Changing that role will require a different mix of activities and may require that the function be configured differently in relation to operating units in order to support changing business strategies and organization designs (Lawler, Mohrman, & McMaha, 2000). Many HR experts have done different surveys and studies of large corporations which focused on a cross-section of firms; they indicated some of the major problems that made it difficult to most firms to align HR with strategic planning, also they offered solid recommendations and solutions to alleviate these problems. Next, I will list three of the major problems that HR experts have indicated in their studies; I believe those are the ones that have more influence on HR ability to become a strategic partner.
Problem: Upper Management Perception of HR Executives
The inability of the human resources management function to influence strategy and contribute to its implementation often starts at the top of the organization where the chief human resources executive often is not part of the senior management team. Instead of reporting to the CEO, he or she reports to an executive at the next level of the organization. Because human resources management executives are not a part of the senior management team, they are not even present when many important strategy issues are considered (Lawler, Mohrman, & McMaha, 2000).
Solution: The leaders of the Future Must Become HR Champions
Leaders at any level of a company must cherish and commit to winning. But wanting to win is not enough; Leaders must set a path that makes it happen. They must build organizations that change, learn, move, and act faster than those of their competitors. To make the best use of the organizational capabilities, executives must see their human resources practices as sources of competitive advantage. The successful leaders of the future must be able to identify the capabilities critical to business success and to design and deliver the human resource management practices that can create those capabilities. To create value and deliver results, the leaders of the future must become human resource champions (Ulrich, 1997).
Human resources organizations need to employ a variety of means to establish the right skill set, including extensive development, looking to the line to find candidates to fill human resources positions, replacing employees with obsolete skills, and outsourcing (Lawler, Mohrman, & McMaha, 2000).
Problem: Poor HR Personal Competencies
HR's beleaguered reputation is well deserved. It is often ineffective, incompetent, and costly. The improved duty of HR requires a change in how HR professionals think and act. In addition, it requires that senior management change what they expect from HR. For HR to be taken seriously, senior management must show that they believe HR can play an important strategic role, beyond administrative duties (Righeimer, 2004).
Solution: Developing HR Professional's Skills Set
Insuring that members of the HR function have the appropriate capabilities (competencies) has been suggested as one way to increase the likelihood of effective HRM. Specifically, two types of HRM staff capabilities have been identified as important: professional HRM capabilities and business-related capabilities. Historically, the presumption of the field was that professional HRM capabilities are sufficient for assuring the development and effective implementation of HRM practices. As the strategic HRM paradigm emerged, this assumption was called into question by those who argued that, although professional HRM capabilities may be necessary to ensure administrative HRM effectiveness, they are not sufficient; business-related capabilities were required also. Presumably, business-related capabilities enable members of a human resources staff to understand how business considerations unique to a firm can create firm-specific HRM needs (Huselid, Jackson, & Schuler, 1997).
The skill set required among the human resources population has increased dramatically, with the need for business skills increasing the most, but with most other skills not far behind (Lawler, Mohrman, & McMaha, 2000). HR professionals must become partners, players, and pioneers. They are more than people who pass through and happen to be assigned to work in the HR; they are theory-based, competency-driven experts who draw on a body of knowledge to make informed business decisions. Further, HR professionals must upgrade themselves. Organizations need HR people who know business, can influence the culture, and make positive change happen within an organization; doing so will bring personal creditability to HR (Ulrich, 1997).
Additionally, HR professionals must focus on the deliverables of their work than on doing their work better. They must articulate their roles in terms of value created. They must create mechanisms to deliver HR so that business results quickly follow. They must learn to measure results in terms of business competitiveness rather than employee comfort and to lead cultural transformation rather than to consolidate, reengineer, or downsize when a company needs to turn around (Ulrich, 1997).
Problem: Too Focused on Administrative
There are two distinct functions of HR. One is HR strategic effectiveness, which is the HR function and development of an organization's employees to support its business goals. However, it is the second HR function of administrative effectiveness on which most HR departments spend their time. These administrative functions are the activities traditionally associated with HR, such as, recruitment, selection, training, performance appraisal, and compensation plans (Righeimer, 2004).
Solution: HR Must Focus on Organizational Capabilities
Quality, innovation, the ability to operate in global manner, the ability to partner, the ability to manage change, the ability to learn, the ability to predictably and regularly grow and finally, the ability to operate in an extremely low cost manner, are all examples of organizational capabilities that require supportive human resources practices that are integrated with other key elements in an organization's design. A focus on organizational capabilities therefore, creates the opportunity for human resource function to be a major strategic player in the design and operation of organizations. In order to be successful, every strategy requires that an organization be able to function in particular ways and with particular organizational capabilities. This means that human resource executives can and should be involved in the strategy formulation process, as well as, in the strategy implementation process. The human resource function is particularly well positioned to provide input about the current capabilities of the organization as well as what the possibilities and obstacles are to developing new capabilities. Because of this, it should play a major role in determining what strategies are feasible and what the difficulties will be in implementing particular strategies (Lawler, 1995).
The results of many researches done by HR experts suggested that organizations that want to take a competitive advantage and outperform the competition must have an effective HR management that's aligned with the overall strategy of the organization. To achieve this, a change must start at the top level of management who must understand the importance of HR in affecting the business bottom line and perceives it as a strategic partner capable of achieving high performance that leads to the organization success. Also, organizations must develop their HR managers and professionals with the rights skills set and encourage them to upgrade themselves with business-related capabilities and become strategic partners.
The challenge for human resource function is to identify what better performance means and then to become expert in the kind of organizational policies and practices that produce it. To do this, human resource function has to be an expert in human resource management as well as in other areas that influence organizational performance. Once a human resource management function decides to focus on organizational capabilities, it needs to look at its own structure and ways of operating to see if they match its new role (Lawler, 1995).