Volume 15 | Issue 4 | Year 2012

We live and work in the ultra–information age where insightful analytics, expansive knowledge and constant innovation are seen as the strategic advantages to keep businesses competitive and running at top speed.
Unfortunately, many organizations’ HR (human resources) strategies seem to be from a different era, when people were considered interchangeable assets in the enterprise machine: Recruit the best graduates, give them periodic reviews, keep retention high, do a yearly engagement survey, and follow the regulations when reductions-in-force are required.

Times have changed.

Or have they?

Just 17 percent of executives surveyed say that HR does a good job of demonstrating its value to the business.

It’s not that executives can’t see the value in HR; it’s just that HR has been a late entrant in the area of analytics, forecasting and innovation.

Compared to marketing, supply chain and sales, HR has been perceived as a “softer” business area – where the appropriate rigor and focus on clearly demonstrating its impact on business results through quantitative and qualitative measures – are not commonplace.

What’s the truth about HR today?

The Economist Intelligence Unit recently conducted a study sponsored by KPMG to understand the current perceptions about HR and what its contribution to the organization should be in the future. More than 400 executives participated, across a broad range of industries and geographies. Findings were often critical, instructive – and sobering.

The study, “Rethinking HR for a Changing World,” found that organizations will continue to view HR as a non-essential department unless it meets the challenges faced by today’s business environment. The report also suggests that HR will remain a secondary player until it aligns its tactics and programs to the business’ strategic direction.

The study found some interesting paradoxes among the businesses and how HR was supporting it. Executives shared trenchant insights on several significant issues:

  • Globalization: 75 percent say their businesses are becoming more global. But 25 percent feel their HR teams excel at sourcing and retaining talent across the globe, and 24 percent report their HR teams are unable to support their company’s globalization strategy.
  • Workforce flexibility and mobility: 60 percent of businesses have increased their use of virtual workspaces. But 55 percent have hired more contract/temporary workers than full-time permanent staff, and 76 percent say their HR departments score “poor” in dealing with this new workforce.
  • Information and technology: 57 percent believe HR is capable of providing insightful and predictive workforce information, especially related to talent. But only 15 percent say their HR teams excel at leveraging data and metrics.

We see four investments that can go a long way to positioning HR as a leader in strategy and value delivery:

  • Transitioning generic HR processes into programs and actions that reflect (and drive) the organization’s strategic direction;
  • Building the tools and capabilities to create actionable outcomes through predictive workforce analytics;
  • Leveraging social media and new technologies to modernize HR service delivery and increase engagement; and
  • Developing and implementing tailored strategies to attract, retain, and develop outstanding talent.

Typically, HR provides historical reports on HR operational processes and programs to the organization. This is both a real and perceived problem, as HR continually looks to “best practices” to be seen as current. However, many of these best practices are generic and rarely tie into and enhance the unique business strategy of the enterprise. We’ve seen this over and over again. We call it the “doom loop.”

Rather than improving HR performance and relevance, it often slows it down. So, in the effort to be a change agent, the over-processed HR organization is seen as a burden.

In the reinvented environment, HR will use qualitative and quantitative measures to report on the people impact of business performance unique to the organization. For example:

  • How complex is the line of sight from an individual’s role to the overall corporate strategy?
  • How engaged are employees on a daily basis?
  • Can we mine social media to determine what future, present and prior employees feel and communicate about the business?

Done properly, such analysis becomes both predictive and insightful about the people agenda. It will require a blend of information that is both qualitative and quantitative, derived from internal and external sources.

Successful HR teams take a lifecycle approach to finding and managing talent.

In the new environment, talent management is reshaped:

  • It begins before the formal recruiting process;
  • It continues throughout an individual’s career;
  • It should be viewed as more than an individual, but rather as teams of talent, interdependent upon others throughout end-to-end processes and functions.

Study findings should be viewed as a baseline for improvement.

Remember, processes don’t innovate, people do. The survey’s significantly positive results can be used for building the future role of HR. Consider responses:

  • 81 percent of respondents say that putting in place the most effective talent management strategy is key to competitive success;
  • 59 percent believe that HR will grow in strategic importance.

We couldn’t agree more.

It is well time – even past time – to begin the journey to reinventing HR.

Karen Isaacson is director and Paulette Welsing is managing director with KPMG Management Consulting. To learn more and to read the entire survey, visit www.kpmg.com/hrtransformation. The opinions expressed in this article are those of the authors and not necessarily those of KPMG LLP.

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