Reshaping the role of HR: From salaries to strategy

The discussion around HR being more enabler than influencer – or HR being quipped for operational not strategic work has been making the rounds for many years now. Slowly but steadily HR is redefining itself in ways that will have far reaching consequences for the future of work.

Take a moment to visualize the HR function as a pyramid. Operations such as payroll form the base; general operations like reporting, talent acquisition and compliance tracking are the second tier; and strategic operations like culture, employee experience and engagement, employment brand, operational efficiency, internal influence and learning and development sit at the topmost tier.

It is commonly believed that most HR functions today operate mainly at the base of the pyramid, while a few are working on building the second level. Fewer still have made it to the top, where HR fulfills its true strategic potential. This is the journey that many organizations and HR teams are undertaking or embarking upon today - and they need a roadmap to boost themselves up from that broad, transactional first level into a more strategic role.

Rethinking HR’s role

If HR is to meet new business expectations and add value to the business, it must undertake this transformation journey. It is time for HR to draw up a plan to move from the base of the pyramid to the top and claim its rightful place as a strategic partner of the business.

Many consider what HR has to offer today is basic and boring. Looking ahead, beyond the flawless delivery of the transactional services such as payroll and benefits, CHROs are being asked to work in new ways to identify strategic workforce challenges and to create talent supply chains that fuel innovation and growth.

These leaders must frame and deliver strategic policies and processes while finding metrics and analytics that provide the boardroom with valuable data and insights needed to gauge the effectiveness of the company’s talent investment and management. Heads of HR functions must accept this challenge and rise to the occasion.

Taking a page out of history

These shifting demands are changing HR and paving the way for new thinking and conversations to emerge.  John Boudreau, management professor at the University of Southern California, compares this shift to the evolution of the role of CFO. A few decades ago, CFOs were pressured to become more strategic as investment demands for new technologies and other global opportunities rose. In response, CFOs expanded their purview from keeping the books to vetting the type and quality of enterprise investments and monitoring overall corporate risk management.

A similar shift is underway for CIOs as technology becomes a driver of competitive success and technology executives are charged with bolstering corporate innovation and success. Now, as HR is asked to become more strategic, the shape of the new breed of CHROs are already visible.

These CHROs are looking at HR technology as the solution, not only for rising above the transactional level, but for elevating mid-level practice to the top of the pyramid with metrics, reporting and added bandwidth. It is the win-win formula with technology able to satisfy the operational and administrative demands as well as aid the strategic side of HR.

Stepping up to the plate

HR is connected to a wealth of data, including payroll, employee engagement surveys, leadership assessments and developments, performance reviews, recruiting, employee feedback and exit interviews. This automatically puts HR in the forefront of business and talent analytics. An increasingly large number of companies are putting analytics professionals and tools in HR to accelerate HR and talent analytics capability.

As HR gets into the driver’s seat to influence and shape organizational strategy and growth plans, it will need to be equipped with some in-depth intelligence and understanding that will help push the arguments and conversation further. HR tech and analytics will need to be focused on strategy, data, and analysis, with the KPIs focused of advancing the value of the company. Yet, let’s not forget that HR is and always will be all about people.

These analytics could measure employees in terms of the value they add to the overall company strategy. HR needs to adopt a long-term view of the situation and realize that instead of concentrating on hire rate they should make sure they are recruiting the right people who directly contribute to the company’s main goal and help them progress on their career aspirations and goals.

Similarly, instead of endlessly debating employee retention percentages, the HR team should evaluate whether they are keeping the people who truly matter to the company goals, and reorganizing the redundant roles or the underperforming employees.

Thinking like the C-suite

While it is not HR’s responsibility alone to figure out what a company’s strategic objectives should be - executives must play an active part in collaborating with HR to determine how the talent needs to develop, work and be staffed in order to achieve organizational goals.

Say for example, a company’s goal is to become number one in customer satisfaction — the actions and analytics of the HR team must directly be linked to the hiring, training, developing, motivating, retaining people with good customer skills. The company cannot provide the best experience to its customers without the right, qualified people in those key positions, with the right measurements to analyze and course correct if needed.

So, as HR becomes more of a strategic force within organizations, using forward-thinking analytics and making talent-related decisions informed by the overall company objective, will ensure it becomes the strategic advisor in all matters about the people in the organization, rather than focusing on tactical items that miss the big picture of getting the company where it wants to go.