Human Resources Management

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The transformation of HR: changing to improve the bottom line Karen Isely - Mercer Human Resource Consulting, Marsha Sussman - Mercer Human Resource Consulting

For further queries, contact:
Marsha on 03 9245 5799, or Karen on 02 8272 6319
Email: marsha.sussman@mercer.com
Email: karen.isely@mercer.com
Imagine your finance function 30 years ago. Then responsibility for sophisticated financial strategies rested with the same part of the organisation as the day-to-day transactions. To deliver what the business needed, the function was transformed - bisected, so to speak, so that financial strategy could be created and executed (the CFO role), while operations could be managed (the Controller role). That's what needs to happen in HR - because our research shows that there is a gap between what CEOs need and what HR is delivering. The good news is that many HR functions in Australia have begun this journey. To be effective - and to deliver the value to the business that the function must demonstrate - the transformation needs to focus on the people in HR and the way they deliver service. This article, the first of two, looks at the transformation currently being undertaken by HR and the factors that will contribute to its being able to deliver what the business needs. In the next article in this series (to be published in coming months), we will take a closer look at the issues involved in developing and expanding HR capability and in measuring HR - moving from cost to value. How and why is HR transforming?

A recent study1 by Mercer Human Resource Consulting (Mercer) has found that HR executives recognise the need to transform their functions if they are going to help their organisations meet the ambitious people management goals they have set. Our 2001 research study, Transforming HR: understanding the human resource evolution, interviewed and surveyed HR executives from over 100 Australian and 33 New Zealand organisations. The research clearly shows that the need for HR transformation in Australia is well recognised - and is being acted upon. [pic]

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Source: © Mercer Human Resource Consulting Pty Ltd (2001), 'Transforming HR: understanding the human resources evolution' The HR executives interviewed report that this transformation is being driven by the top goals HR functions must strive to achieve: • develop leaders

• recruit and retain a quality work force
• manage performance systematically
• develop culture
Given these business goals, however, it is surprising to see how HR executives see their roles, and how their functions are spending time. How HR executives see their role
HR functions typically operate across four roles2:
• administrative expert
• employee champion
• change agent
• strategic partner
In the Mercer studies (both global and Australian) when asked in which roles they perceived the HR function as being successful, a greater proportion of HR executives nominate 'administrative expert' over that of 'strategic partner'. This makes sense, given (a) where the function has been, and (b) that HR only earns the right to operate on a more strategic stage once the basic 'nuts and bolts' have been attended to. In the global study, line managers were also asked to rate the success of HR in each of these roles. It is disquieting that a smaller proportion of line managers rate HR as successfully as the HR function rates itself - this is particularly the case for the role of strategic partner. [pic]

Source: William M. Mercer-sponsored Conference Board Study, 1998 What does HR need to do differently?
Not surprisingly, HR executives indicate that HR staff are spending the bulk of their time delivering HR services and processing transactions - and that what they want to be doing is partnering with the business to deliver results. For this transformation to occur, HR executives believe - and we concur - that three things must happen: • HR staff must upgrade...
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