From transactional to strategic – Here’s what HR should know

The term ‘HR business partner’ was coined in 1996 by Dave Ulrich. In a volatile business world, where business needs are constantly changing, and customer expectations are soaring, human capital takes on discretionary importance as a core differentiator for success. Modern-day HR leaders must deeply understand the business needs by working closely with the business and align a suitable talent strategy. They must proactively prepare the organization for current and future challenges by enabling the adoption of advanced HR technologies, and taking smart decisions about investing in the right HR initiatives, based on the quantitative metrics. 

Today, we focus on HR playing a role as a business partner, where it will be involved in discussions around how to increase revenue and reduce cost, identify/attract/retain talent, and create the most productive and innovative workplace possible. We have re-contextualized the HR convention, to look at HR from the perspective of the needs of the organization. We then look at HR challenges from the perspective of the business goals, by asking the question “How does this company succeed?”, and “How can HR contribute to this success?”

As we transform our HR business function to provide a platform for supporting the ongoing success of our respective organizations, HR needs to pay attention to these three aspects of its role:

1. Understand business context: HR needs to be in tune with the needs of its organization. HR managers need to know the challenges the business faces as well as having the ability to realize the opportunities provided by this rapidly changing VUCA environment (VUCA stands for volatile, uncertain, complex and ambiguous). It means we can’t take another 20 years to create an agile and flexible support platform to help our organizations respond to market disruptions.
2. Account for talent dynamics: In this connected, Information Age, communication goes beyond physical boundaries. We can find and manage talent across borders and boundaries. The products and services of companies, too, are available globally. Much depends on our ability to choose and leverage the right people across geographies. We are in the midst of the knowledge-based economy and are more aware of what kind of people and talent we need. However, we need to operate in a talent-scarce marketplace, where building your own talent and/or buying it will still not provide the talent needed by the organization. And these constraints are amplified by the challenge of managing a multi-generational workforce and retaining the best talent in a fluid and dynamic talent market.
3. Make use of analytics:  One of the key roles of HR is to develop and leverage deep insights into the workforce. We acknowledge that managing people is a complex responsibility, and providing HR practitioners with analytical tools doesn’t just help them to understand the past or present behaviors of the workforce, but also to make predictions in the future. Using sophisticated data-mining technologies, HR can utilize the recorded behaviors of the workforce in the past, and project this into the future, to understand what HR management issues may arise.  Then, using the latest generation of predictive tools, HR can model changes to the workforce and workplace, and upon deciding on the optimum course of action, put these actions in place to avert HR issues and optimize positive HR outcomes.

Organizations are re-engineering their HR processes to meet the fast-evolving corporate landscape. For instance, organizations are evaluating the utility and value of traditional performance management processes and moving toward more rapid goal-setting and feedback cycles, while acknowledging the increasing value of network contributors as well as individual contributors to business unit outcomes.  This focus on true business contribution and outcomes will bring HR closer to the Board and C-level executives in each organization and will allow HR to play a truly strategic role in each organization’s success.