Shifting from a balance of strategic and operational HR work to a disciplined focus on strategic HR work is a dominant agenda of high-performing HR functions, writes Wayne Brockbank
Dani is a highly competent chief HR officer in a high-performing company. As she looks to the future, she recognises that her company will face substantially greater competitive challenges, which will require a more strategic HR approach. Comments from her line colleagues support her instincts that pressures on her HR department to create greater value will increase.
Yet, she already is working 12 to 13 hours a day and six to sometimes seven days a week. She sees the same pressures on her departmental colleagues. She loves her work but wonders how to handle the increasing pressures on her and her department to do more. She has long since recognised that some of her department’s activities create greater value than others. But some of the lower impact work must still be done.
What should she do?
Where can HR add most value?
Research from the University of Michigan and the RBL Group give clear direction to help her resolve her conundrum. Since 1987 and continuing to present, this research has answered two basic questions, “Which competencies of HR professionals and which HR department practices have the greatest impact on business performance?” Among other issues, this research examines the relationship of the between strategic and operational HR work as they impact firms’ financial performance.
In the early years of the research, we found that HR departments that achieve a roughly equal balance between strategic and operational HR work had the greatest impact on business results. But as the business environment has become more global, volatile, uncertain, cost-conscious, rapid, and competitive, HR departments found that they simply could not do it all. Under such pressures, many HR departments gave up or delayed their strategic aspirations and chose to focus on getting the basics done – the operational HR work.
However, the firms that were associated with high performing companies found ways to reduce the time and effort spent on the operational work and focused their attention on strategic HR activities.
Inside high-performing HR functions
The high-performing HR departments increased their focus on strategic agendas including building organisational capabilities (especially cultural capability), enhancing talent pools and developing present and future leaders. While focusing on these strategic HR agendas, high-performing HR departments reduced the time and effort spent on less valuable work.
“Many HR departments gave up or delayed their strategic aspirations and chose to focus on getting the basics done – the operational HR work”
The first step was the outright elimination of some programs and practices. Some of these may even be popular with employees and leaders but their direct impact on sustainable performance was problematic. Such activities had reached the point of marginal diminishing return.
Other HR activities were outsourced with appropriate and rigorous accountability. Some were allocated to shared services that were structurally separated from HR and combined with other standardised transactional work such as accounting and IT. Much operational HR work was automated with varying degrees of success. Some HR departments attempted to shift operational HR work to already overworked line managers. Some HR work was re-engineered to eliminate waste and reduce time and effort.
All of these were done following Pareto logic, the 80-20 rule or the mandate that “everything that is worth doing is not worth doing well.”
How can Dani strike a balance?
Conclusion, Dani’s way to create greater value without expending additional time and effort is to focus on the strategic HR work while reducing the time and effort spent on the operational HR work. The logic is clear. Dani must now work through the internal politics of transitioning her department from one that balances operational and strategic HR work to one that has a disciplined focus on the high value-added strategic HR work.
5 steps for HR: shifting from operational to strategic HR
- Identify the per cent of operational work that must be eliminated.
- Determine the operational work that must be continued, and which may be eliminated
- Eliminate that which can be eliminated.
- Outsource, insource, automate, transfer, or re-engineer the remaining operational work.
- Most important, then focus the HR agenda on building organisational capability, enhancing the talent pool and developing present and future leaders.