Research shows much of HR’s time is spent on general admin but also gives pointers to how the profession can develop a key strategic role. Andrew Rogers reports
A global HR benchmarking report makes depressing reading for practitioners. One finding is that HR departments spend more time on general administration than on any other specific activity.
Although this might be true for other parts of a business, it is something of an indictment of a profession intent on securing its place as a key strategic player in organisational performance.
According to the PricewaterhouseCoopers HR Benchmarking Report 2000, (News, 3 October) the average UK personnel department spends 15.5 per cent of its time on general administration. In Europe the figure is slightly higher at 17 per cent.
There are some glimmers of hope. The report is quite optimistic about the progress of the personnel function, suggesting that HR departments are broadly focusing their efforts in line with organisational goals.
The report covers data from HR directors and specialists in 977 organisations across Europe and the Middle East, 23 of which are from the UK. It finds that the three most important business issues today are growth, cost reduction and innovation.
So what are HR departments doing to support these aims? Their three key issues are apparently organisation and culture change, leadership development and recruitment.
Priorities and objectives
The report suggests there is some correlation between these priorities and organisational objectives. The issues of leadership development and recruitment can clearly have an impact on the issue of growth. The focus on attracting, developing and retaining talent and on culture might be said to have some bearing on an organisation’s ability to innovate.
Yet despite this, many HR people are disappointed with their role in relation to business strategy. Only 19 per cent felt satisfied with their influence on strategy and only one-third of HR departments were represented on the management team.
One problem seems to be that if you scratch the veneer of the profession, you reveal a dismaying amount of drudgery. Apparently, the average HR department has one employee for every 57 staff (the proportion ranges from 1:41 in smaller organisations to 1:62 in larger ones), the largest proportion of whom – 42 per cent – are support staff. Fifteen per cent of total HR time is expended on “general HR administration”.
Given that 62 per cent of UK companies outsource at least some of their admin-intensive HR activities – 54 per cent partly outsource their recruitment, for example – there is a lot of paper pushing still going on in personnel departments.
“It doesn’t surprise me, but it does sadden me,” says Peter Dixon, head of HR at Thistle Hotels. “The HR world tends to be far too admin driven. Although it’s easy to get trapped in that situation, you have to rise above it and find ways of moving the business forward.”
Possibly, UK HR departments are not taking full advantage of the potential of IT to reduce the administrative burden of providing HR services. Surprisingly few organisations in the sample have adopted an intranet-based “self-service” approach. Indeed, the UK appears to be lagging behind many other countries in this regard.
Although the use of IT and web-based solutions has increased dramatically, technology is less prevalent in HR than might be expected. For example, only 21 per cent of organisations used web-based training.
Dixon has some sympathy with the circumspection regarding e-solutions. “I think it’s too early to say whether HR departments are failing to take full advantage of IT. Too often invention becomes the mother of necessity and I have seen people rushing to create e-learning strategies and putting the cart before the horse.”
The most critical part of the report, however, is the section dealing with how HR measures its performance. At the strategic level, PWC acknowledges that while the focus on recruitment, training and development broadly supports strategic priorities, “it is less clear how well this time investment links to successful business outcomes”.
Looking at the detail, it appears that HR departments don’t measure very much at all, and those things that are measured are often low level operational issues. Top of this list is absenteeism, which is measured by 83 per cent of HR departments. Meanwhile, 58 per cent could lay their hands on employee satisfaction figures for you and 47 per cent know their staff turnover. Only 12 per cent could tell you the average time employees stay with the company.
Mike Haffenden, partner of HR recruitment specialists Strategic Dimensions, says he isn’t surprised. “HR people measure things that don’t matter,” he says, attributing this to the misdirection of the profession as a whole.
Role of HR
Haffenden’s company has carried out extensive research on the profession and he says the results often make depressing reading. “Most personnel people try to fix people rather than fixing organisations. They are always doing 360-degree feedback or coaching or counselling when really it’s not the people that need fixing, it’s the context in which they work.”
Haffenden’s view is that the role of HR is about organisational design, improving communication flows and making sure the strategic direction is clear and well understood.
“A good example is the response you get if you talk to personnel managers about change. Their idea of change is incremental change or improvement, but most organisations need transformational change,” he says.
Haffenden, however, is pessimistic about the potential of the profession to achieve its strategic aspirations. “We’ve done quite a lot of work which indicates that most personnel people aren’t experts in HR, they don’t understand the world of business and they don’t have the right interpersonal skill set.”
Dixon agrees that personnel departments are generally weak on useful performance measurements. “The focus should be on measuring the department’s impact on customer service and the bottom line,” he says.
“Too few people are able convincingly to correlate employee satisfaction with customer satisfaction. Yet if an HR department fails to do that it can hardly complain when it doesn’t get viewed as a strategic force.”
PWC’s report is critical of HR’s reliance on operational measures and recommends adopting a balanced scorecard approach, which would measure impact on strategy (for example: ROI, revenue per employee), impact on customers (employee satisfaction ratios, complaints) and process efficiency measures (costs of recruiting, time to hire and costs per payslip). This, says PWC, would give HR far greater credibility.
Performance measures for HR
Turnover of new hires within 12 months
Average time to fill position
HR cost per employee
Employment contract offer/acceptance ratio
% turnover related to career development issues
Average time in a position
What organisations consider priorities
Enterprise-wide cost reduction
What HR considers priorities
Organisation and culture change
Recruitment of employees
What HR does
General HR admin
Training and education
Source: PwC HR Benchmarking report
• The HR Benchmarking Report 2000 is published by PricewaterhouseCoopers. For more information contact David Baty on 020-7212 2037