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HR not yet a ‘strategic business partner’ PDF Print E-mail
Written by EBO Editor   
Saturday, 29 January 2011 06:40

EMEA HR Transformation Survey

London, 20 January 2011

Only 15% of activities carried out by HR departments across Europe, Middle East and Africa (EMEA) are related to pure strategic interventions, according to 500 Human Resource Directors (HRDs) surveyed by Mercer. Its report also highlighted that, in spite of this, 65% of HR departments perceive themselves as a strategic partner to their business. While respondents sought to increase their future strategic input to more than 25%, the difference in perception and reality highlighted that HR departments still have far to go in their effort to transform themselves into more accountable and more measurable strategic business partners.
The responses come from Mercer’s HR Transformation Survey which analysed responses from more than 40 countries across EMEA. ‘HR transformation’ is defined as improvements in efficiency, effectiveness, training and strategic input as well as projects that align the HR department’s activities more closely to the needs of the business. The research builds on trends from previously run surveys in 2003 and 2006. It tracks HR’s endeavours to strategically reinvent itself and anticipate business growth while transforming itself into a more valued business partner.

Astik Ranade, a Principal at Mercer and co-author of the report, pointed out “HR appear chameleon-like, constantly aware of and adapting to their changing environment and keen to lead organisational change, yet their ultimate goal to be considered fully strategic is a branch too far.

He added, however: “What we’re seeing is a renewed interest across EMEA from companies keen to re-examine their HR function, its value to the business and how it can further influence its internal strategy and alignment. Slowly but surely, HR is making progress.”

HR Transformation in EMEA
The report highlights that transformation efforts were unrelenting during the recession with more than half of participants confirming that they will continue to engage in, or commence, transformation efforts in the year ahead.  

The key driver of HR transformation projects was part of a broader organisation-wide transformation process.  The second most frequent occurrence was in response to specific changes in the organisation. Interestingly, in 2010, 14% stated that HR’s awareness of its own imperfections prompted their transformation efforts, with a goal of facilitating change across the organisation. No respondents emphasised this driver in 2006, reflecting possibly the desire by most business units, in the midst of the 2008-2010 recession, to prove their value for money before it was imposed on them.

Overall, there were fewer HR transformation activities planned in 2010 compared to 2006. Top planned initiatives in 2010 included redesigning HR processes (42%), designing a new strategy for delivering HR services (39%), and talent development strategy for improving skills in HR (39%). While there was less time devoted to these activities in 2010 compared with 2006, the attention devoted to the assessment of HR effectiveness (37%) remained consistent in both surveys.

HR as a strategic partner
In light of these changes, the expectation is that HR would be making progress in its attempts to be seen as a more strategic partner. Indeed, 38% of respondents did state that their HR department is a strategic partner and fully participates in their company’s strategy decisions. Twenty-eight percent said that while they fully participate in strategy decisions, they don’t participate in the decision-making process. Twenty-six percent said that HR was not yet a strategic partner but was increasing its influence, while 8% stated that HR was not seen as a strategic partner.

However, while the report identified that many HR professionals perceive their department as a strategic partner, only 15% of its time is allocated to related strategic activities with the largest proportion spent delivering HR services (27%). Respondents said that the remainder of their time is spent on compliance / auditing (12%), transacting / record keeping (18%), designing HR programmes or systems (14%) and internal management (14%).

Respondents do believe that HR is a strategic partner because it is an active participant when discussing significant business-wide issues. It is also expected to translate business strategy into a human capital strategy and develop methodologies to impact the workforce.

However, while HR acknowledges its evolution, there are internal and external barriers that are influencing its growth; these include the capability of supervisors in management of their staff, the skills and competencies of their people, cost constraints, the business perception of the value that HR brings and the attitudes of other department line management to the HR team.

According to Brad McCaw, a Principal at Mercer and co-author of the report, “This gap in perception and activities can be addressed by investing in the skills and training of HR staff, while also increasing awareness and people management skills amongst line management, to ensure their activities encompass not only the day-to-day work that needs to be done, but also supports the strategic direction of the business. Measurement and analysis are also vital.”
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 20,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York and Chicago stock exchanges.

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