Human resource functions have come a long way from the“personnel department” of decades past, whose primary role was, in many instances, to hire and fire employees, administer pay and benefits plans and in industrial environments, keep union issues at bay.
HR, as a function, has clearly evolved. In today’s environment, that evolution continues as companies are faced with business realities such as margin tightening, organizational restructuring, global expansion, a competitive talent market, and a more mobile workforce. Many organizations are re-examining the structure of their HR functions and how they deliver service to the organization. So, while HR is clearly viewed in a much more strategic context, we see an increasing focus by our clients on improving the effectiveness of how HR services are delivered. In today’s challenging business environment, it is important for HR to deliver strategic value while also delivering these services in a cost effective and efficient manner.
To add value to the organization and its employees, HR must focus less on what it “does” and more on what it “delivers.”
Focus on Effectiveness
In order to devote more hours to value-added planning and consulting activities, HR leaders are using a variety of tactics to reduce the time and effort spent on routine tasks and administrative services. This isbeing achieved in ways such as:
New HR service delivery models New technology Process improvements A variety of outsourcing approaches New HR service metrics Developing HR talent with business insight
Many will agree that a value-generating HR function concentrates on outcomes and results that promote organizational effectiveness. By focusing on effectiveness, HR professionals measure how their work enhances:
Strategy execution Business and HR efficiency Commitment and productivity of employees Organizational capacity for continuous learning and change
Focus on Efficiency
While the quest for effectiveness is critical, it is equally important that many organizations simultaneouslyneed to focus on increased efficiency. This is based on the premise that an HR function will create business value via two primary drivers:
- The allocation of scarce HR resources. How dollars and people are allocated to HR activities should reflect the business activities that create a competitive advantage. For example, many organizations devote too many resources (both in terms of dollars and employees) to developing training and development programs that do not create any type of distinct competitive advantage. If these programs are developed simply to comply with regulations or to offer the organization liability protection in the case of a lawsuit, then why not spend less on an outsourced solution and/or an off-the-shelf program? If HR succeeds in smarter resource allocation, it follows that the group will operate more efficiently and will deliver far greater value. In fact, anecdotal evidence suggests that high-performing organizations may spend as much as 25% less on HR while delivering greater value.
- Providing insights into how employees create value Employees contribute to company success in a variety of ways. The formula for success is efficient work processes and wise utilization of investments combined with the right kind of employees: skilled, productive, and cost effective. The specifics of this formula vary with the types of business activities and whether the focus of the activity is value creation, effectiveness, or efficiency. One size does not fit all. HR practitioners must have the business savvy and insight to develop a balance of standardized and customized services that deliver the most value.
Summary: Do Both
Our perspective is that both efficiency and effectiveness are required for an HR department or organization to provide value. Equallyimportant, is understanding how to make this value “real” in your organization, as both sides of this coin will potentially require different actions. The end result is an HR organization in step with the times that the company executives turn to for advice, guidance and strategic decision-making.
Lydia Mannion-Evanson is the Managing Partner at LME Creative Human Resources Solutions, LLC. LME is a human capital consulting firm that works with our clients to attract, retain and develop their talent. LME takes a pragmatic and practical approach to helping companies manage their human capital. For additional information regarding LME and their services pleasecontact Lydia Mannion-Evanson. You can reach Lydia by contacting her at LydiaMannion-Evanson@LMECHR.com or 1-800-928-4785 or visit our website at www.LMECHR.com.