A global survey by the Economist Intelligence Unit and Deloitte Touche Tohmatsu suggests modernising the role of HR to meet increasing strategic challenges.

31 May 2007

AMSTERDAM - A global survey by the Economist Intelligence Unit and Deloitte Touche Tohmatsu suggests modernising the role of HR to meet increasing strategic challenges.

The report, “Aligned at the Top,” a global and cross-industry survey of 531 HR and non-HR executives, indicates that HR is struggling to serve enormous demands as people issues move to forefront of leadership agenda 

While senior business and human resources executives agree on the key people issues that are critical to business success, business leaders believe HR may be struggling to serve both the enormous strategic and operational implications.  

As many as 85 percent of participants believe people are vital to all aspects of their organization’s performance, and that number rises to nearly 90 percent when looking three to five years ahead.  Yet, only 3 percent of participants describe their current organization as “world-class” in people management and HR functions, and only 23 percent believed HR currently plays a crucial role in strategy formulation and operational results.

The study indicates that senior business leaders perceive HR to be more focused on transactional activities, such as benefits and performance evaluations, and HR operating efficiencies rather than high-level strategic people issues, such as leadership development. In fact, when senior executives discuss people issues, HR oftentimes isn’t even mentioned. Case in point: more than half (52 percent) of the respondents still don’t have a Chief Human Resources Officer or comparable C-level executive dedicated to people issues.
 
Regionally, respondents perceived the effectiveness of the HR function differently with companies in North America giving HR the highest average marks, followed respectively by Asia Pacific and Western Europe. Similarly, 60 percent of North American respondents view people issues as “significant” or ”highly significant” to strategic decision making, compared to 49 percent in Asia Pacific and 48 percent in Western Europe.

The study also shows that many HR organizations already recognize the challenge to be more strategic and are shifting their administrative transactions and other non-strategic activities to shared service centers or an outsourcing vendor.  Approximately 25 percent already outsource recruitment, training and payroll, while another 15 percent expect to outsource these and other HR activities in the next three to five years.

Survey respondents agree that the role of HR will change - within the next three to five years the vast majority (95 percent) expect HR to be perceived as a strategic, value-adding function, not just a cost center.

A full copy of the  report is available at www.deloitte.com/us/alignedatthetop .

[Copyright Expatica 2007]