Making HR a Business Partner

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.

1)      Train HR people in business to get holistic business perspectives. To be successful business partners, the HR staff members have to think like business people, know finance and accounting, and be accountable and responsible for cost reductions and the measurement of all HR programs and processes. It’s not enough to ask for an executive cabin or a post of CEO; HR people will have to prove they have the business savvy necessary to sit there.

2)      Get involved in larger organisational issues and handle coordination at that level. Fostering effective methods of goal setting, communication and empowerment through responsibility, builds employee ownership of the organization. The HR professional helps establish the organizational culture and climate in which people have the competency, concern and commitment to serve customers well.

3)      Align HR strategies with business strategies. In this role, the HR person contributes to the development of and the accomplishment of the organization-wide business plan and objectives. The HR business objectives are established to support the attainment of the overall strategic business plan and objectives.

4)      Keep in mind business strategy while designing training programmes. The HR manager provides employee development opportunities, employee assistance programs, gain sharing and profit-sharing strategies, organization development interventions, due process approaches to problem solving and regularly scheduled communication opportunities.

5)      Convene business strategies forums, hold strategic discuss meetings, and prepare discussion papers

6)      Initiate process of discussion on strategy formulation from the front-line upward. The HR professional contributes to the organization by constantly assessing the effectiveness of the HR function. He also sponsors change in other departments and in work practices. To promote the overall success of his organization, he champions the identification of the organizational mission, vision, values, goals and action plans. Finally, he helps determine the measures that will tell his organization how well it is succeeding in all of this.

7)      Help in searching state of the art practices to discuss with the business team.

These new functions fall into one or more of the categories of the HRD system,
The classification suggested earlier is only indicative.

Organisation can structure their function the way that suits their requirements. The principles remain the same. The boundary gets extended to participation in strategy and business planning (including planning of mergers, acquisitions, expansions, Consolidations etc.).

The HRD systems model is broad enough to include the new roles of HR managers. Researches have shown that effective firms adopt some of the following HR practices:

  • Financial incentives for excellent performance
  • Practices that motivate employee effort and capture the benefits of know-how and skill
  • Rigorous selection and selectivity in recruiting
  • Higher than average wages
  • Plans of employee share of ownership
  • Extensive information sharing
  • Decentralisation of decision-making and empowerment
  • Self-managing teams
  • High investment in training and skill development
  • Having people do multiple jobs and job-rotation
  • Elimination of status symbols
  • A more compressed distribution of salaries across and within levels
  • Promotion from within
  • Long-term perspective
  • Measurement of HR practices and policy implementation

The case for HR being a strategic partner is becoming stronger, as it rests on the reality that human capital and how it is organized are increasingly pivotal to organization effectiveness. There is ample evidence that how human capital is recruited, developed, organized and managed has a direct and strong influence on organizational performance.

It is easier to point to what HR needs to do than it is to make it happen. However, if HR fails to change, its role in strategy will remain limited. There is a “stubborn traditionalism” that characterizes the HR profession. It is characterized by progress (both technically and in the services and programs delivered), but there is a consistent lack of progress in HR’s strategic contribution and influence. The results reinforce the need for HR to change by not merely improving in areas that have traditionally been HR’s mission, but to extend its paradigm to include measuring, understanding and communicating strategic talent connections. HR must improve the human capital decisions of leaders in all functions and at all organizational levels.