Research from LogicaCMG Highlights the HR dilemma in modern businesses

New study suggests HR directors want to shift emphasis from traditional HR tactics to measurable strategic practices, but are often dragged back to administrative issues through poor systems and processes

A new survey of HR directors and CXOs from among UKís top 500 companies, commissioned by LogicaCMG and released today, highlights the real ñ and occasionally worrying ñ differences in the view of the HR function between HR heads and their CXOs. However, there is much to encourage HR heads and CXOs alike. HR directors have demonstrated a real desire to adapt their departments to become more like business units ñ exactly what their boards are looking for.

Amongst many wide-ranging findings, the research identifies that:
HR wants to make a greater contribution to business strategy and ultimately business successñ and this is welcomed by CXOs

HR departments continue to be weighed down by day-to-day tactical imperatives

There exists a divide amongst the HR community when it comes to HR business process outsourcing ñ some see the advantages, others are wary about how this will affect their roles

HR directors and CXOs agree that more time should be devoted to HR issues at board level ñ but both parties need to be flexible when trying to achieve this goal.

While almost three quarters (72 per cent) of HR directors felt that the function already makes a strategic contribution to the business, less than half (46 per cent) of CXOs agreed with this statement. Encouragingly, however, just 25 per cent of HR directors felt that HR departments should only provide important HR functions and processes - and leave strategy and strategic development to other areas in the company. This strongly suggests that HR directors are keen for their departments to offer strategic leadership.

Ultimately, it is the transactional nature of the majority of the HR directorís day-to-day responsibilities that limits the scope for strategic initiatives: 52 per cent of HR directors indicated that over 70 per cent of their time is taken up with process-driven activities ñ leaving precious little time to devote to the strategic elements vital to HR in modern businesses. Indeed, almost half (46 per cent) of the CXOs interviewed recognised that HR needs to be less transactionally focused. This point is further reinforced by two-thirds (66 per cent) of the HR directors polled wanting their role to be more strategic, but stating that ëthere arenít enough hours in the dayí. The question remains as to how this conundrum can be solved; one method is to outsource the transitional elements freeing HR directors to focus their energies on increasing communication and networking with the other strategically focused executives.

However, even the CXOs perception of their HR directorsí use of time demonstrates the divide in understanding. Forty two per cent of CXOs believe that their HR director spends over 50 per cent of their time on strategic and corporate issues ñ however only 4 per cent of HR directors claim to spend this much time on these issues.

When asked about how transformational practices such as HR business process outsourcing (BPO) might help them, the views of the HR directors were contradictory - clearly demonstrating a divide in the views of the HR community. Despite the fact that it can help free up core time for strategic advancement, 48 per cent of HR directors felt that ëmoving to an outsourced approach would cause me personal concern for my own job securityí. On the contrary, 50 per cent could see the clear benefits; ëa move to outsourced HR would provide me with greater career opportunities and professional developmentí.

ìHR BPO provides a real opportunity for visionary HR people. There are many ambitious HR professionals that are keen to realise the strategic potential of their departments ñ something that their bosses are keen that they do,î says Mike Madgwick, director of HR Outsourcing at LogicaCMG. ìUsing outsourcing for the processes and day-to-day operations is an effective way to help improve the efficiency of the department whilst allowing the HR director to expand their skill setî.

Something that both CXOs and HR directors agreed on was the need for change. Around a third (30 and 34 per cent respectively) agreed with the statement that ëHR needs to change with the times as it has typically fallen behind in all areasí. In fact, 60 per cent of HR heads believe that ìwe will miss key opportunities if we do not change our attitude about our function and position within the organisationî.

The research implies that it is in the area of measuring the effectiveness of the HR department that the most useful changes can take place, leading to an explicit acceptance by management that HR is contributing beneficially to the bottom line, and thus further facilitating the opportunity for HR to take the strategic role it desires.

When all of the above is taken into consideration, the study points out that one issue hampering fuller engagement between CXOs and the HR function is simply one of communication. The survey clearly suggests that HR heads are not being given enough time on their boardsí agenda ñ with 66 per cent of HR heads spending less than 10 per cent of their working month with board members. The flip side of this is that a good proportion (42 per cent) of CXOs feel that they are not spending enough time with their HR counterparts.

ìWhen we embarked on the study, naturally we expected to see significant disparity between the CXO and the HR director view of the HR function ñ but we were surprised by the extremity of some of these differences,î continues Madgwick. ìAt the same time it was heartening to see that HR professionals and their board-level counterparts both recognise the strategic value that HR can bring to businesses. This research points to a need to shift the role of the HR Director, such that HR can be a driver for increased profitability, and input into the overall company strategy. For this to happen, though, we need to have a ësea changeí in HR practice that removes the process-driven drudgery and frees-up HR resource to make a full, potent, and measurable contribution to the operational effectiveness of the businesses.î