HR teams are failing to drive business growth because they are unable to cope with business needs, and are failing to deliver a return on investment, according to a report published today by KPMG.
Published in association with the Economist Intelligence Unit, the report canvassed the views of 400 global "C-suite" executives and found that only one respondent in five (17%) thinks that HR does a good job.
Respondents to the "Rethinking HR for a Changing World" survey claimed that HR had failed to keep pace with the changing nature of workplaces and subsequently is unable to manage a global, fluid workforce. The findings have led KPMG to suggest that HR has "wasted the past 20 years" and failed to truly demonstrate its business value.
KPMG warned that HR will be viewed as a "non-essential" department unless it can meet the challenges of today's business environment, and urged HR practitioners to move away from historical data and embrace technology and forward-looking analytics that will help it to understand employee needs.
Without doing this, KPMG suggests that HR will remain the "poor relation" at the boardroom table compared to other business functions.
Robert Bolton, partner at KPMG Management Consulting and global lead of the firm's HR centre of excellence, said: "This survey shows that, at the very least, HR has a perception problem, though in some cases it may have actually failed to deliver real value.
"Given the high unemployment rates in many countries, you would be forgiven for thinking that retention is an easy task for HR. But with employee engagement levels an increasing concern, more effort must be put into understanding staff needs before today's employees become tomorrow's alumni."
The survey found that many HR functions are trying to make better use of mobile apps and social media to provide data that HR teams believe is useful.
Of the respondents, 31% pointed to the benefits of data analytics, suggesting it will be the area most likely to receive HR investment between now and 2015. KPMG said that to succeed, HR must "no longer rely on instinct" but instead collect clear information on where demands for skills lie.
However, KPMG suggests the move towards data analytics faces cynicism. Based on previous experiences, just 15% of respondents said that they see HR as able to provide insightful and predictive workforce information.
In response to the survey findings, the Chartered Institute of Personnel and Development (CIPD), said HR professionals need to be business savvy, and set out to highlight HR's "unique position and value".
Vanessa Robinson, CIPD head of HR practice and development, said: “HR professionals are in a unique position to be able to spot the hard and soft factors in organisations that represent either risks, or opportunities, for driving sustainable performance. The need for HR practitioners to demonstrate their ‘business savvy’ ability was highlighted in CIPD research, published earlier this year.
“Business savvy HR practitioners understand where value is created and destroyed within their organisations and are able to identify people-related improvement points which drive value and enhance organisational performance. The most effective HR professionals have the courage to ask questions and look for explanations even when the knowledge required seems masked in technical or professional jargon. It us up to individuals to ensure that this business savvy behaviour is constantly practiced and reflected upon if the HR function is to become embedded at a strategic level within organisations.
“Initial findings from the latest CIPD HR Outlook report, due to be published later this year, show that although cost management and belt-tightening in the current economic climate are still the primary focus for the majority of organisations, HR needs to look beyond these immediate priorities for opportunities to truly add business value for the long term.”
For more information on aligning HR strategy with business needs, see XpertHR's 2012 survey results on the topic and Personnel Today's HR strategy content.