Recent Trends in Human Resource Management

Sunday, May 11, 2008

HR to become a Strategic Partner

Challenges for HR to become a Strategic Partner

1. Avoid Strategic Plans On Top Shelf (SPOTS).
More strategies are written than acted upon. More visions are created than realized. More missions are espoused than executed. More goals are stated than accomplished. Becoming a strategic partner means turning strategic statements into a set of organizational actions. Overcoming the challenge of SPOTS requires that HR professionals force organizational issues into the strategic discussion before strategies are decided. HR needs to facilitate organizational diagnosis that highlights how aligned business strategies are to organization culture.

2. Create a Balanced Scorecard
The concept of Balanced Scorecard is not new but its application has become increasingly popular. A balanced scorecard focuses on serving multiple stakeholders (investors, customers, and employees) and can be a total performance index assessing executive performance. HR executives, for example, are judged on the extent to which they add value for each stakeholder. The categories apply to any large or complex business.

• Economic Value Added (EVA): Meeting the financial numbers expected of the executive.
• Customer Value Added (CVA): Meeting Customer-service goals.
• People Value Added (PVA): Meeting employee expectations.

These three indicators form an overall, balanced scorecard measure for tracking executive performance. If HR executives are to be strategic partners, they need to absorb and apply the concept of the balanced scorecard in two ways.

First, they need to be equally accountable for all segments of the balanced scorecard, not just for the employee dimension. As the balanced scorecard indicates, employee commitment is only one criterion for effective HR performance, and HR professionals in strategic partnership will be held accountable for the same dimensions as other managers.
The HR professional’s performance is no longer judged by his PVA score alone, but by all three scores. This approach requires that HR professionals master their business’s financial and customer issues and recognize their contribution to attaining these goals.

Second, although accountable for all three dimensions of the balanced scorecard, HR professionals should provide intellectual leadership on the employee dimension. This means that we as HR professionals should not restrict ourselves in measuring employee commitment and satisfaction index alone. Rather, we need to define the employee dimension of the balanced scorecard not only in terms of employee attitude, but also in terms of organizational processes. The processes represent those activities that affect employee attitude, such as leadership, teamwork, communication. Empowerment, shared values, mechanisms for treating individuals with dignity and so on. By measuring these processes and employee attitudes, HR professional fully define the employee stakeholder dimension of the balanced scorecard.

3. Benchmarking, or learning about best practices, has become increasingly important when it comes to evaluating Human Resource management. With great fervor, teams of employees identify and visit other companies recognized as world class. These field visits provide businesses with information on how to gauge their work relative to the best in class.
Traditionally, benchmarking was done on the harder, more objective aspects of a business, for example, technologies, systems, financial ratios, or quality. Increasingly, firms also benchmark softer management practices.

Firms like General Electric and Digital Equipment Corporation deploy a senior management team to examine management practices in some of the best managed firms in the world to identify key processes for improving productivity. It was concluded that best practice in human resources should focus less on a particular practice than on a set of general principles. This involves leveraging a system of HR practices by focusing on two or three key strategic initiatives that promote the integrative theme. This way the HR function adds value that is credible and understood by both line and HR management.

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