There have been two major trends that are evolving traditional HR to strategic HR:
Growth and Speed of Knowledge Exchange
- It is crucial for an organization’s workforce to be skilled and empowered to produce results that keep an organization at a competitive advantage.
Automated Core HR Functions
- Not having some of the traditional responsibilities, such as payroll, reporting, and training, leaves HR with an opportunity to utilize additional time to contribute to the strategic direction of the organization and increase profit.
This leads to the debate of whether CEOs want and believe the HR Director is capable of contributing and overcoming challenges that pertain to the entire organization. In a survey conducted by the Economist, most CEOs feel confident in the ability of the HR Director to make strategic decisions for his or her own department. Decisions that affect the entire organization are a whole different realm. CEOs have yet to make a commitment to transition the role of an HR Director from an administrator to a strategic partner. Looking at it from a different perspective, the HR Directors do have access to the CEO and have experience working with the C-suite. It would not be difficult for HR to penetrate this level of leadership and evolve into a more strategic role.
The survey also asked the CEOs what they were most concerned with in the future. Over half responded that insufficient talent and inadequate leadership are major concerns. Both of these can lead to long-term significant financial issues in an organization. The motivation and productivity of a workforce is critical for success and works in conjunction with achieving the organization’s mission. It is easy to overlook the negative effects of a stagnant workforce during a growth period, but it will become very apparent in difficult times.
Why is there such a difference between the reality and ideal involvement of HR in the strategic direction of an organization? This may stem from the HR Director’s lack of involvement in strategic planning due to a narrow focus on the HR needs and limited scope of how it can contribute to the entire organization. A majority of CEOs believe the HR department is too focused on enforcing rules and regulations versus applying how human capital can help a company evolve. When they become too focused, there is limited time and effort to gain an understanding of the organization’s needs beyond HR. There is also belief that when the heads of HR step outside their realm, the performance is not up to par. While they are good at managing core HR functions, other strategic contributions such as succession planning and developing key talent are not being accomplished.
Where does your HR fall, or better yet how do you want to see them? Give them the opportunity to progress from traditional to strategic by executing a strategic, transformational initiative. The recent article CEOs Decide: HR or No HR provides four stages and a foundation to begin the process for HR to become more effective and add value.
Economist Intelligence Unit. (2012). CEO perspectives How HR can take on a bigger role in driving growth. The Economist , 1-20.