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Strategic HR to the rescue of the human capital battle

Human capital is at the top of global organisations’ priority lists, however, confusion about how to leverage HR effectively prevents many companies from reaching their full potential.

According to the latest Conference Board Challenge Survey of 729 global CEOs, human capital is rated 10% higher than operational excellence as a major challenge for businesses. Yet for the most part, HR continues to be treated as a peripheral function.

The 2013 Global Assessment Trends Report (GATR) found that:

 

  • 41% of firms surveyed are confident that their human capital strategy is properly embedded in their organisational strategies, and
  • Most senior business leaders are unclear about who should actually be responsible for these critical issues.
Erna Oldenboom, director of the HR as a Strategic Business Partner Programme at the UCT Graduate School of Business, says that there would be no confusion if organisations integrated HR into their overall business strategy.

“HR is a strategic business partner that should be involved from the very beginning in the vision, mission and procedures of the organisation. In this way, all HR approaches and systems can better contribute to and support solutions for recruitment and retention, salary, reward, training, support, codes of conduct, client relations and so on.”

The GATR also identifies the top priorities for HR globally as:

 

  • Engagement and retention (55%),
  • Leadership development (52%),
  • Performance management (49%),
  • Workforce planning and talent analytics (43%),
  • Training (42%),
  • Succession planning (38%), and
  • External hiring (38%).

The report is based on a survey of 592 HR professionals from around the world – 13% of which are South African.

“These findings clearly illustrate that globalisation demands stronger HR capabilities. Demographic shifts across the world are dramatically affecting the availability of qualified personnel. HR needs to step up its game, take HR’s traditional roles and look at how they are affecting the business. There is an urgent need for HR to integrate more fully into the strategic goals of the business.”

Oldenboom says that HR leaders are increasingly aware of this but at the same time not enough is being done to put it into practice. She says that “those who want to remain relevant must focus on strategically supporting their organisations and the customers they serve.”

Many HR leaders are more than willing to partner with the business but given, for example, each individual company’s unique situation they have little concrete guidance about how to fulfil that role.

The HR manager’s role must parallel the organisation’s changing needs

This goes for the director and the executive as well. Successful organisations are becoming more adaptive, resilient, quick to change direction and customer-centric. Within this context, the HR professional, who managers and executives consider necessary, needs to be aware of the impact that strategically aligning HR with their business’ goals can have.

However, for many HR practitioners strategy may not be something they have been taught to consider.

According to Brad McCaw, a principal at Mercer and co-author of the 2012 Mercer HR Transformation Survey report, the gap between perception and activities in the HR domain can be addressed by investing in HR staff’s skills and training, as well as increasing awareness and people management skills among line management to:

  • Ensure their activities encompass not only the day-to-day work that needs to be done,  and
  • Support the business’ strategic direction.

 Measurement and analysis are also vital.

Executive leadership must ask HR leaders some tough questions…

… if an organisation’s HR is not transforming itself to align with forward-thinking practices. “Today’s organisations cannot afford to have an HR function that fails to contribute to, and even lead, modern thinking,” says Oldenboom.

This is the new function of HR. Instead of falling into confusion about who should take responsibility for human capital issues, organisations should align their human capital agenda with overall goals by placing HR at the strategic centre of their businesses.



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