The present business environment is unparalleled by the demand for leaders to be familiar with global markets, demonstrate adaptability to innovations in technology, as well as show tolerance to rapid changes in business imperatives. Add to this, the realities of an open market where global work opportunities abound. The conundrum for Human Resources (HR) professionals is when to leverage one’s expertise in relation to business demands and when to leverage one’s leadership impact on the business. Stated differently, when does HR respond to client requests (reactive approach) and when does it drive client demands (proactive approach)? The “reactive approach” is more in line with HR’s administrative function; whereas the “proactive approach” calls for a strategic focus. Weighing the merits of each, and knowing how to balance one’s time and involvement to do both is critical as it has implications for organizational effectiveness.
Organizational Effectiveness and the Role of HR
Organizational effectiveness is intricately tied to business outcomes. In fact, one can argue that the relationship between the two is rather symbiotic. As organizational effectiveness goes down, so do business outcomes. Organizational effectiveness is more than overseeing human capital management. It includes knowing what HR services produce outputs and which ones are responsible for outcomes on the business. Outputs are generally HR functions that respond to business demands with the outcome being the impact it has on the business. For instance, rather than a single focus on restructuring executive compensation packages, there would be an equal focus on maximizing the upside of a strategically differentiated compensation package (for instance, include a knowledge transfer component) in relation to its impact on the future of the business. Similarly, instead of dealing with labor relations by resolving the conflict between executives in corporate office and salaried employees, there would be a simultaneous focus on increasing communication skills among both parties as part of a larger talent management initiative intended to drive better business relationships overall. Outputs attributed to the HR function are, therefore, considered in light of the impact they have on the business outcomes strategically planned for. Hence, what is being advocated is for HR to deliver on strategic imperatives and aspirations in addition to overseeing its more administrative responsibilities. Empirical research in the field of HR as well as our own experience is clear on one thing: Board members and executives expect HR professionals to take on a more active, strategic role in relation to organizational effectiveness. This requires that they think about human capital management as being integrated and aligned with where the business is at the present time and where it is heading. This may involve turning the HR department into an internal consulting organization whereby corporate leaders can count on support for strategic decisions, business planning, talent development, and change management in addition to relying on operational requirements (such as compliance/policies; governance; compensation; employee relations; labor relations; health/safety, etc.). This recommendation is not new. In fact, over the past 10 years, researchers and practitioners alike have been calling for a complete overhaul of the HR function into a more strategic one (see works by Jamrog & Jiang, Lepak, Hu, & Baer, 2012; Kahnweiler, 2006; Lawler, & Boudreau, 2006; Overholt, 2004; Ulrich, & Brockbank, 2005; Ulrich, 2014; Vosburgh, 2007).
HR Leaders: Experts in Facilitating Business Outcomes
In our line of work, we have learned that a key difference between HR leaders who succeed in becoming strategic in focus and action (and therefore, transforming their organizations) versus those who remain on the sidelines and simply do as they are told was having a sense of purpose. These leaders saw themselves not like “experts in their field”, but rather as experts in facilitating relationships, removing obstacles, and strengthening ties across departments; thereby, favoring business outcomes. They were more curious to learn about the business instead of declaring their expertise. They were also more interested in sharing their observations, informed intuition, and ideas about business decisions than they were about pleasing leaders. And finally, they were more inclined to get out of their comfort zone in taking on risky assignments, working with challenging leaders, or making tough decisions than sticking to what was safe and low risk for their careers. No one will dispute that change in perspective and courage to be more than what one can image (or to move past what one’s role seems to suggest) does not happen by sitting around and wishing for it. We have seen these HR leaders work consistently and persuasively toward change in perception. All HR leaders have the opportunity to be seen as strategic partners. When they shift how they see themselves, and become more involved in the business, they can make great things happen. Begin today by making a commitment to hold discussions with your HR colleagues and team on how to better align the HR purpose, competencies, and expertise to respond to evolving business needs. In doing so, you are positioning the HR function as the main driver of organizational effectiveness and proclaiming to everyone across the organization that HR has a strategic purpose. Want to know how we can support you in transforming your HR Department? Go ahead and send us an email at email@example.com and ask to speak to one of our management consultants.