Does HR lead the march or play second fiddle when it comes to business strategy? Karen Dempsey reports on the findings of Personnel Today’s exclusive research.
Ask 10 HR directors to define HR strategy, and you’re likely to get 10 very different answers. But one theme will run through all of these def-
initions: for HR to be strategic, it must be in tune with overall business goals and have a key role in shaping them. However, a survey exclusive to Personnel Today shows that – despite its best intentions – HR is sometimes off-key.
At a time when HR’s status in an organisation often depends on how strategic it is, it may come as a surprise that, on average, more than a quarter of the 1,400 HR professionals surveyed (27%) do not perceive themselves to be close enough to the core business.
That is just one of the eye-opening statistics from the HR Strategy Survey, which was carried out by Personnel Today in association with Richmond Events, and revealed exclusively on board the cruise ship Oriana at the HR Forum last week.
While 90% of HR directors interviewed say they are close enough to the business to help the organisation achieve its goals, this does not filter down through the HR ranks. More than one-third (34%) of HR managers and other HR staff feel they are not close enough to the business, though the majority of HR departments (53%) believe HR will become more integrated with the business in the next 18 months.
Further disparities between what the business wants to achieve and what HR departments are capable of delivering emerged when we asked HR departments to name the three biggest issues that their organisations will be addressing in the next 12 to 18 months.
The top priority for business is cost-effectiveness, followed by change management, restructuring, and growth. However, HR does not always find itself positioned to help organisations to achieve these strategic goals. Cost-effectiveness was ranked fifth in the list of issues that the HR function can help with. In contrast, the main challenge that HR says it can affect is employee engagement – only sixth on the list of issues that HR believes organisations need to address.
“These are extremely worrying statistics,” says Sally Russell, head of engage and align at HR consultancy RightCoutts.
“No department can influence business strategy if it doesn’t know how the business works. The HR director needs to tap into upper management and board networks and ensure that HR has a voice in the decision-making process. Otherwise, HR will only ever implement strategy, rather than shape it,” warns Russell.
One way of fine-tuning HR’s alignment with the business, according to Neil Hayward, group HR director at tobacco company Gallaher, is to run annual surveys with company departments on the performance and focus of HR.
“At the very least, this checks their perception of how we are doing. Communication, marketing and selling skills are then the key to changing these perceptions,” says Hayward.
Strategy versus admin
Board membership has traditionally been the barometer of HR’s strategic status. But having a seat at the top table is no guarantee that the input of HR directors is always valued – or that they spend their whole time ‘doing strategy’.
HR directors are on the board in about half of the organisations that participated in the survey. The retail and health/pharmaceutical sectors are most likely to have board-level HR representation; those least likely are charity and catering.
Yet two-thirds (65%) of HR departments describe themselves as primarily administrative, and only 35% as strategic. Whether they perceive themselves to be strategic or not, HR practitioners spend, on average, just a quarter of their time on strategy. Although directors devote more time to strategy (37%), they still spend the majority of their time on day-to-day concerns.
“It is one thing to say you are strategic, but another to actually live strategy,” argues Graham White, head of HR at Surrey County Council.
“To do that, we must become players in the business operations, playing prospective roles rather than being passive admonishers of inappropriate acts of our colleagues. These figures confirm we are still reacting to the requirements of the organisation and not participating in its design,” adds White.
So which HR activities are perceived to be the most strategic? We asked survey participants to rate a series of HR functions according to how strategic they believe them to be – and how much time is spent on them.
Change management and re-organisation came top, and is the issue that takes up the majority of directors’ time, according to 54% of respondents.
What is interesting is the varying attitudes to succession planning in business. HR regards it as the second most strategic function, yet an average of 6% of respondents (20% for directors) say they spend much of their working day focused on it.
HR may regard it as highly strategic. But HR practitioners also believe that their organisations place little value on succession planning as an HR function in comparison with other issues such as recruitment and resourcing, change management and performance management.
Perhaps unsurprisingly, the task that eats up the most day-to-day time is general administration. Even 42% of directors admitted it was one of the top three things that they spent their time on. For 82% of HR staff, administrative tasks occupy most of their working day.
Emma Hughes, director of group HR at high-street optician Specsavers, says this is the way it should be. “Admin is a vital component of what we do, but it really should be done by our administrative staff. This then enables HR managers to get more involved in strategy or, at the very least, the execution of strategy,” she adds.
It could be argued that if everyone in the HR department got involved with strategy, then there would be no-one to carry out the essential, bread-and-butter functions of an HR department. Hughes agrees that “too many strategists are in danger of ruining the broth”.
“I see the development of strategy as my responsibility. I do this in consultation with my managers, who I count on to be able to tell me the ‘word on the street’, and have a good idea of the operational needs of our people. If they spent all their time developing strategy, nothing would ever get done,” says Hughes.
Recruitment experts claim that ‘strategy’ is in danger of becoming an over-used term in HR. Candidates seek ‘strategic’ roles as they believe they’ll be more important than more routine HR jobs, says John Maxted, managing director of HR recruitment consultancy Digby Morgan.
“The reality is that HR – as indeed other support functions such as finance, marketing and legal – are inherently involved in administration and process. The way that HR can provide the greatest value is to provide proactive operational support to the business,” says Maxted.
Making it count
Admin aside, our survey shows that an average of one in 10 HR departments does not agree that it adds value to the organisation. And 16% disagree that they offer the organisation good value for money. This figure rises to 22% in the public sector.
This admission can be interpreted in two ways: one, that HR undervalues what it does and needs an injection of confidence; or two, that perhaps it isn’t sure how to measure and prove its real value.
HR consultants argue it’s the latter that will sort the HR strategists from the rest.
“I think it’s more than likely that most HR departments do offer good value for money, but they simply aren’t breaking down what they do and quantifying the impact on the bottom line,” argues Russell. “HR professionals simply need to ensure that they find the time to prove it.”