HR Role in Organizations

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A Survey Report by the Society for Human Resource Management

HR’s Evolving Role in Organizations and Its Impact on Business Strategy
Linking Critical HR Functions to Organizational Success

PROJECT TEAM Project leader: Project contributors: Amanda Benedict, M.A., survey research specialist Nancy R. Lockwood, M.A., SPHR, GPHR, manager, HR Content Program Evren Esen, manager, Survey Program Steve Williams, Ph.D., SPHR, director, Research

External reviewers and contributors: SHRM Organizational Development Special Expertise Panel: Libby Anderson, M.S., SPHR, Fernán R. Cepero, PHR, Tom Darrow, Nancy Gerhardt Davies, Ernest Gundling, Charity Hughes, MSOD, SPHR, John Lewison, SPHR, Colleen Mills, Ph.D., Ken Moore, Maggie Romance, SPHR, Trellis Usher-Mays, Bill Young, SPHR HR Consulting/Outsourcing Special Expertise Panel: Franchette Z. Richards, GPHR, GMS, CRP Copy Editing: Design: Production: Katya Scanlan, copy editor Shirley Raybuck, graphic designer Bonnie Claggett, production traffic coordinator

This report is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information. © 2008 Society for Human Resource Management. All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the Society for Human Resource Management, 1800 Duke Street, Alexandria, VA 22314, USA.

For more information, please contact: SHRM Research Department 1800 Duke Street, Alexandria, VA 22314, USA Phone: (703) 548-3440 Fax: (703) 535-6432 Web: www.shrm.org/research
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HR’s Evolving Role in Organizations and Its Impact on Business Strategy
A Survey Report by the Society for Human Resource Management May 2008

CONTENTS About This Report.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 About SHRM. ...................................................................................1 Introduction. ....................................................................................2 Methodology.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Key Findings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Survey Results .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Critical HR Functional Areas.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 HR Responsibility Sourcing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 In-House HR Responsibilities .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Partially Outsourced HR Responsibilities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Completely Outsourced HR Responsibilities .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Decisions About Sourcing HR Responsibilities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Assignment of HR Responsibilities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 HR Function/Department Staffing Changes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 HR’s Role Within the Organization.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Strategic vs. Transactional Role .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 HR Mentoring.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 HR’s Impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 HR Metrics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Tracking Staff Hours .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Obstacles to HR Effectiveness .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Conclusions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Demographics .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Appendix.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Endnotes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Recently Published SHRM Survey Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ABOUT THIS REPOrT In September 2007, the Society for Human Resource Management (SHRM) conducted a survey about how human resource functional areas and responsibilities are approached within organizations. This report presents an analysis of the HR in Organizational Context Survey results and examines differences among organizations by organization staff size and employment sector. In 2007 and 2008, SHRM reviewed existing research to identify differences in how organizations approach human resources. Workforce size has a profound effect on the roles and responsibilities of HR functions within organizations. The results of this review are compiled in a report titled The Varying Roles of HR: A Look at HR by Organization Staff Size.1 Relevant findings from previous SHRM survey data included in the review are presented in this report to contribute to the understanding of the human resource function within organizations of various sizes. ABOUT SHRM The Society for Human Resource Management (SHRM) is the world’s largest professional association devoted to human resource management. Our mission is to serve the needs of HR professionals by providing the most current and comprehensive resources and to advance the profession by promoting HR’s essential, strategic role. Founded in 1948, SHRM represents more than 225,000 individual members in over 125 countries and has a network of more than 575 affiliated chapters in the United States, as well as offices in China and India. Visit SHRM at www.shrm.org.

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Introduction

HOW HR OPEraTES WITHIN OrGaNIZaTIONS MaTTErS TO BUSINESS STraTEGY Human resources includes a myriad of functional areas, encompassing responsibilities from recruitment and staffing to compensation and benefits or training and development. The human resource profession has evolved during the past 20 years and continues to change, from the collective demographics of HR professionals and the ways that practitioners enter the profession to the functions and roles served by HR and the value it brings to organizations.2 HR is increasingly mobilized to offer much more to organizations than record-keeping, payroll and employee benefits administration. In fact, many of the transactional functions that traditionally formed the core of HR departments’ responsibilities are now often outsourced so that organizations can focus on business strategy through talent management and leadership development activities. Yet, it is argued that HR functions and departments in many organizations are not engaged in strategic roles. What factors contribute to how HR’s role is viewed within the organization? Human resource functions and departments are typically bound by a number of organizational factors, not the least of which is the staff size of the organization. How do organizations determine which functional areas are critical to the organizational strategy, the priority of critical functions and how to best develop and assign HR staff to those functions? While organization staff size clearly has an influence on the headcount and budget within the organization’s HR function and/or department, there may be other factors contributing to decisions about HR responsibility and functional area staffing. How much control do HR professionals have over the functional areas to which they are assigned and/or the scope of their responsibilities? To what extent are HR professionals receiving mentoring about strategic contributions to the organization, including from organization leaders in non-HR functions? Understanding how HR is approached in the context of the organization in which it operates is crucial to understanding how HR contributes to business strategies and the value that it is poised to bring to the organization. Moreover, it adds to the overall picture of HR professionals’ career progression expectations as well as non-HR business leaders’ perceptions of and mentoring involvement with HR.

Understanding how HR is approached in the context of the organization in which it operates is crucial to understanding how HR contributes to business strategies and the value that it is poised to bring to the organization.

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Methodology

The survey was conducted among HR professionals employed by organizations operating in the United States. The survey instrument included questions regarding organizational practices and HR staffing related to human resource functions within respondents’ organizations. A sample of HR professionals was randomly selected from SHRM’s membership database, which included approximately 225,000 individual members at the time the survey was conducted. Only members who had not participated in a SHRM survey or poll in the previous six months were included in the sampling frame. Members who were students, consultants, academics, located internationally or had no e-mail address on file were also excluded from the sampling frame. Beginning in September 2007, an e-mail that included a link to the 2007 HR in Organizational Context Survey3 was sent to 3,000 SHRM members. A total of 2,744 surveys were successfully delivered, and 589 HR professionals responded, yielding a response rate of 21%. The survey was fielded for a period of three weeks. Two e-mail reminders and a faxed reminder were sent, and reminder phone calls were made to sample members in an effort to increase the response rate. The sample was representative of the SHRM membership population, although there were some differences by organization staff size, with more HR professionals in this sample from small- and medium-staff-sized organizations and fewer from large-staffsized organizations. HR professionals in this sample were more likely to report that their HR departments had 1–4 employees and less likely to report that their HR departments had larger numbers of employees. Compared with the general SHRM membership, HR professionals in this sample were more likely to be from the service (profit), manufacturing (durable goods) and health industries.

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Key Findings

The top three critical HR functional areas that contributed to organizations’ current business strategies were 1) staffing, employment and recruitment, 2) training and development, and 3) employee benefits. Among HR professionals who indicated that staffing, employment and recruitment was one of their organizations’ top three critical HR functional areas, more than one-half reported that it was their first priority. The HR responsibilities most likely to be staffed in-house were performance management, employee communication plans/strategies, policy development and/or implementation, and strategic business planning. The HR responsibilities that were most likely to be outsourced were employee assistance/counseling and flexible spending account administration. One-half of HR professionals reported that their organization’s business strategy contributed to the decision of whether to staff, outsource or eliminate various HR roles and responsibilities, suggesting an alignment of HR function staffing decisions with business operating plans. The largest percentage of HR professionals from organizations that intended to expand their HR departments in the next 12 months reported that their decision to hire additional HR staff was due to the HR department/function being understaffed for current number of employees within the organization. Slightly less than one-half of HR professionals reported that their organizations had formal (i.e., documented and established) systems and processes in place for collecting HR metrics and/or measurement data. Among these, slightly more than one-half reported formally calculating the impact of HR activities on measurable aspects of business performance. The largest percentages of HR professionals reported that HR’s effectiveness was limited by the budget and headcount available for HR initiatives.

The top three critical HR functional areas that contributed to organizations’ current business strategies were 1) staffing, employment and recruitment, 2) training and development, and 3) employee benefits.

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Survey Results

CrITIcaL HR FUNcTIONaL ArEaS Although conducting business and managing a workforce involves multiple human resource activities, some HR functional areas are of more importance than others in supporting the organization’s business strategies and operating plans. When asked to identify the top three critical HR functional areas contributing to their organization’s current business strategy, more than one-half of HR professionals (52%) reported that staffing/employment/recruitment was among the most critical HR functional areas. The next largest percentages of respondents reported that training and development (29%) and employee benefits (29%) were among their top three critical HR functional areas. This indicates that HR is most likely to support the organization’s business strategy through human capital-related areas such as building, developing and maintaining the workforce. The smallest percentages of HR professionals reported that EEO/Affirmative Action (3%), international human resource management (HRM) (1%) or research (less than 1%) were critical to their organization’s current business strategy. Staffing and employee benefits issues are often intertwined. John Lewison, SPHR, director of human resources for MDRC and SHRM Organizational Development Special Expertise Panel member, offers, “Both recruitment and talent retention are key issues for our company. We are a large policy research organization in New York, where attracting and retaining academic-trained experts in the fields of welfare, disability, prison reform and education are key. While we’re anticipating that a softer economy may make it easier for us to hire support-related staff in 2008, we’re still expecting a competitive market for key researchers and economists.” “We are constantly examining our benefit programs, not only from a competitive perspective, but in terms of cost-effectiveness. This is especially true for our wellness programs; e.g., medical, hospital and dental plans. With employees in large cities on both coasts, like many companies, we’re hostage to the vagaries of escalating medical costs. A while back we shifted to a self-insured model, coupled with stop-loss insurance to better control our costs. So far, this approach seems to be working. We also embarked on several cost-savings initiatives, such as increasing copayments and deductibles. Many companies have taken similar actions,” says Lewison.

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Table 1 | Which HR Functional Areas Are Most Critical to Contributing to the Organization’s Current Business Strategy?
Overall (n = 582) Staffing/employment/recruitment Training/development Employee benefits Employee relations Strategic planning Administrative/transactional Change management Compensation Organizational development Legal compliance Communications Workforce planning/forecasting Human resource information systems (HRIS) Health, safety, security Diversity Labor/industrial relations HR metrics/measurement data/return on investment EEO/Affirmative Action International HRM Research Other 52% 29% 29% 27% 27% 18% 17% 15% 15% 13% 10% 10% 9% 8% 7% 6% 5% 3% 1% 0% 1%

Note: Data sorted in descending order. Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 2 | Critical HR Functional Areas Contributing to the Organization’s Current Business Strategy (by Organization Staff Size)
Overall (n = 582) Employee benefits Strategic planning Administrative/transactional Legal compliance Human resource information systems (HRIS) Diversity 29% 27% 18% 13% 9% 7% Small Medium (1 to 99 employees) (100 to 499 employees) (n = 142) (n = 177) 35% 19% 25% 19% 6% 2% 27% 28% 19% 11% 8% 5% Large (500+ employees) (n = 138) 20% 34% 11% 7% 14% 10% Differences by Organization Staff Size Small > large Large > small Small > large Small > large Large > small Large > small

Note: Data sorted in descending order by “overall” column. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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As shown in Table 2, several differences emerged in critical HR functional areas according to organization staff size. HR professionals employed by small-staff-sized organizations (1 to 99 employees) were more likely than HR professionals from largestaff-sized organizations (500 or more employees) to report that employee benefits (35% compared with 20%), administrative/transactional functions (25% compared with 11%) and legal compliance (19% compared with 7%) were among the top three critical HR functional areas that contributed to their organizations’ business strategies. By contrast, HR professionals from large organizations were more likely than their counterparts employed by small organizations to place strategic planning (34% compared with 19%), HRIS (14% compared with 6%) and diversity (10% compared with 2%) among their organizations’ top three critical HR functional areas. In addition to reflecting the organization’s business strategy, these data may also indicate the organization’s philosophy of HR responsibilities as well as the availability of HR staff to undertake selected functional areas and initiatives. Table 3 depicts differences in critical HR functional areas based on organization sector. HR professionals from nonprofit organizations (37%) were more likely to report employee benefits as one of the top three critical HR functional areas than were respondents from publicly owned for-profit organizations (18%). HR professionals from publicly owned forprofit organizations (36%) were more likely than their counterparts from privately owned

Related Research
SHRM recently reviewed previously released survey data related to HR roles and responsibilities in order to identify differences in how HR is approached by organizations of various staff sizes. What emerged
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lenges experienced in supporting HR functions and the varying ways in which HR professionals bring value to organizations of different workforce sizes. Although HR functional areas support organizational functions, there are variations in the extent to which HR departments feel that

they contribute strategically through performing these responsibilities. HR professionals from medium organizations (97%) were more likely than those from small organizations (88%) to report that their HR department strategically contributed “to some extent” or “to a large extent” to the organization’s recruitment and selection processes. HR profession-

als in medium organizations may be able to more immediately see the impact of their activities on organization functions compared with their counterparts from large organizations and may be more likely than those in small organizations to feel that HR activities are an integral part of organization functions.

was a picture of HR professionals’ level of engagement in various HR and other functional areas within organizations, differences in chal-

Extent to Which HR Department Strategically Contributes to Organization Functions (by Organization Staff Size)
Overall (n = 419) Recruitment and selection processes 94% Small (1-99 employees) (n = 111) 88% Medium (100-499 employees) (n = 174) 97% Large (500+ employees) (n = 120) 95% Differences by Organization Staff Size Medium > small

Note: Table includes only response options for which there were significant differences between organization staff-size categories. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Percentages include responses of “to some extent” and “to a large extent.” HR professionals who responded “not sure” or “not applicable” were excluded from this analysis. Source: SHRM 2006 Strategic HR Management Survey Report

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for-profit organizations (21%) to report that strategic planning was among the top three critical HR functional areas contributing to their organizations’ business strategy. Labor and industrial relations were more likely to be among the top three critical HR functional areas for government agencies (24%) than for publicly owned for-profit organizations (3%) or privately owned for-profit organizations (3%).

Table 3 | C  ritical HR Functional Areas Contributing to the Organization’s Current Business Strategy (by Organization Sector)
Overall (n = 582) Employee benefits Strategic planning Labor/industrial relations 29% 27% 6% Publicly Owned For-Profit (n = 114) 18% 36% 3% Privately Owned For-Profit (n = 235) 31% 21% 3% Nonprofit (n = 71) 37% 30% 6% Government (n = 42) 14% 29% 24% Differences by Organization Staff Size Nonprofit > publicly owned for-profit Publicly owned for-profit > privately owned for-profit Government > publicly owned for-profit, privately owned for-profit, nonprofit

Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 4 | Priority Ratings of Critical HR Functional Areas Contributing to the Organization’s Current Business Strategy
First Staffing/employment/recruitment (n = 266) Training/development (n = 144) Employee benefits (n = 138) Strategic planning (n = 135) Employee relations (n = 134) Administrative/transactional (n =92) Change management (n = 83) Compensation (n = 77) Organizational development (n = 77) Legal compliance (n = 60) Communications (n = 53) Workforce planning/forecasting (n = 51) Human resource information systems (HRIS) (n = 45) Health, safety, security (n = 35) Diversity (n = 35) Labor/industrial relations (n = 29) HR metrics/measurement data/return on investment (n = 26) 57% 18% 18% 56% 26% 23% 36% 31% 26% 50% 30% 24% 22% 37% 37% 28% 12% Second 23% 44% 39% 25% 37% 28% 33% 44% 39% 38% 36% 33% 36% 37% 31% 24% 27% Third 20% 38% 43% 19% 37% 49% 31% 25% 35% 12% 34% 43% 42% 26% 31% 48% 62%

Note: Data sorted in descending order by number of respondents who indicated that each HR functional area was among the top three areas critical to their organization’s current business strategy. Rankings for each of the HR functional areas include only respondents who indicated that it was a top critical HR functional area contributing to the organization’s business strategy. Only critical functional areas that at least 25 respondents selected as a top priority are included in table. Row percentages may not total 100% due to rounding. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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HR professionals were asked to rank the priority of their organizations’ top three critical HR functional areas. Of the respondents who indicated that staffing/employment/ recruitment was a critical HR functional area, more than one-half (57%) reported that it was the top-ranked priority for their organizations. More than one-half of respondents (56%) who selected strategic planning as a critical HR functional area ranked it as the top priority for their organizations. One-half of HR professionals (50%) who indicated that legal compliance was one of their organizations’ top three critical HR functional areas rated it as the first priority. Among those who identified training and development as a critical HR functional area, the largest percentage of HR professionals (44%) reported that it was the second priority for their organizations. Of the HR professionals who indicated employee benefits as a critical HR functional area, 43% responded that it was the third-ranked priority within their organizations. These data and others depicted in Table 4 reflect organizations’ workforce development philosophies as well as the predominant HR functional areas to which organizational resources may be allocated. SHRM Organizational Development Special Expertise Panel member Fernán Cepero, PHR, vice president of human resources for YMCA of Greater Rochester, offers, “The results are indicative of a Generation Y trend that is intertwined. Allow me to explain: “The first critical area confirms the challenge HR professionals have in recruiting and retaining Generation Y employees. The decision to accept a job offer involves many factors for Generation Y. A good job is no longer defined by monetary gains alone. Gen Y employees take a job because they want to work somewhere, not because they have to. “The second critical area validates the first point in that training and development initiatives must appeal Generation Y’s desire to learn and involve the application of high-technology mediums, such as online media (i.e., webcasts, videos, podcasts, blogs, instant messaging). Recruiting efforts must now highlight paid training and skill development. “The third and final—benefits—requires HR to attract/sell Generation Y on benefits such as flexible schedules, telecommuting and full tuition reimbursement. While all employees think the benefits they receive as a part of their compensation packages are an important factor in rating job satisfaction, what type of benefit they value is entirely different. Gen Y employees don’t necessarily plan to stay at a company very long, and both Gen Y and Gen X employees grew up without expectations of job security, so HR professionals do not expect to win their loyalty by talking about ‘traditional benefits’ such as pension vesting or funeral leaves. To motivate these generations, focus more on the benefits they value most—flexibility to balance work and life.” HR RESPONSIBILITY SOUrcING Which HR responsibilities are carried out in-house and which are outsourced, either partially or completely? Table 5 depicts the sourcing of common HR responsibilities. The vast majority of organizations that carry out performance management (94%), employee communication plans/strategies (93%), policy development and/or implementation (91%), strategic business planning (90%) and compensation and/

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or incentive plans administration (85%) staff these HR responsibilities within their organizations. This finding suggests that organizations strongly prefer to maintain control over these HR responsibilities rather than to entrust them to a third party by outsourcing. These may also be the HR responsibilities that require the most in-depth understanding of the organization’s workforce and would be most difficult for a third party to competently perform on the organization’s behalf.

Table 5 | Sourcing of HR Responsibilities
Completely In-House Performance management (n = 482) Employee communication plans/strategies (n = 477) Policy development and/or implementation (n = 495) Strategic business planning (n = 463) Compensation and/or incentive plans administration (n = 489) HR metrics/measurement data/return on investment (n = 353) Organization development (n = 461) Recruitment/staffing of employees (nonexecutives) (n = 507) Affirmative Action Plans/EEO-1 filing (n = 382) Learning management system (n = 411) Human resource information systems (HRIS) development (n = 435) Payroll administration (n = 504) Employee relocation (n = 292) Expatriate administration (n = 178) Recruitment/staffing of executives (n = 492) Training and development programs (n = 480) Work/life balance benefits administration (n = 337) Wellness programs (n = 376) Consolidated Omnibus Budget Reconciliation Act (COBRA) (n = 491) Executive development and coaching (n = 407) Risk management/worker’s compensation (n = 484) Health care benefits administration (n = 504) Temporary staffing (n = 448) Background/criminal background checks (n = 462) Retirement benefits administration (n = 452) Pension benefits administration (n = 422) Retirement planning (n = 432) Employee assistance/counseling (n = 425) Flexible spending account administration (n = 411) 94% 93% 91% 90% 85% 82% 78% 78% 76% 61% 59% 59% 57% 54% 54% 54% 53% 40% 36% 36% 34% 33% 30% 26% 25% 24% 23% 17% 15% Outsource Partially 5% 6% 8% 8% 13% 12% 21% 21% 20% 33% 30% 31% 26% 36% 40% 42% 31% 38% 18% 50% 46% 40% 45% 22% 45% 44% 49% 21% 25% Outsource Completely 1% 1% 1% 2% 2% 6% 1% 1% 4% 7% 11% 10% 18% 10% 6% 4% 17% 22% 46% 14% 21% 27% 25% 52% 31% 33% 28% 62% 60%

Note: Data sorted in descending order by “completely in-house” column. HR professionals who responded “not applicable” were excluded from analysis. Row percentages may not total 100% due to rounding. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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By contrast, more than one-half of organizations completely outsource employee assistance/counseling (62%), flexible spending account administration (60%) and background/criminal background checks (52%). Retirement benefits-related responsibilities were among the HR responsibilities that the largest proportions of organizations partially or completely outsourced, including retirement planning (77%), pension benefits administration (76%) and retirement benefits administration (75%). Retiree benefits are an area where many companies have recently made changes, including freezing plans and changing from defined benefits plans to defined contribution plans. Many organizations may find it more efficient and cost effective to outsource the administration of their retiree benefits to firms that are highly knowledgeable about the financial regulations involved with these types of plans and benefits rather than to staff that specialization in-house. Views of HR’s role within the organization may also influence which functions are outsourced. Comments Franchette Richards, GPHR, GMS, CRP, member of SHRM’s HR Consulting/Outsourcing Special Expertise Panel, “Human resource functions

Top 5 Insourced HR Responsibilities
1) Performance management 2) Employee communication plans/ strategies 3) Policy development and/or implementation 4) Strategic business planning 5) Compensation and/or incentive plans administration

Related Research
Although critical HR functional areas may be clearly aligned with and prioritized according to the organization’s business strategy, HR professionals’ perceptions of the extent to which various HR functional areas add value to the organization’s business strategy may be linked to the size of the organization. The results of the 2007 Human Resource Competency Study yielded numerous differences by organization staff size in HR professionals’ perceptions of how various HR practices add value to the business.5 Compared with HR professionals from large organizations, HR professionals from small organizations reported to a greater average extent that training and development added value to the business. Compared with HR professionals from large organizations, HR professionals from medium organizations reported to a greater average extent that performance appraisal, internal communication, organization structure, workplace policies and work process design add value to the business. These findings may reflect HR professionals’ general observation of immediate or lasting impact to the organization as a result of HR practices.

Average Degree That Various HR Practices Add Value to the Business (by Organization Staff Size) 
Small (1-99 employees) (n = 26) Training and development Performance appraisal Internal communication Organization structure Workplace policies Work process design 4.24 3.72 3.72 3.44 3.88 3.24 Medium (100-499 employees) (n = 36) 4.11 4.22 4.19 4.00 4.42 3.63 Large (500+ employees) (n = 381) 3.76 3.74 3.63 3.59 3.87 3.20 Differences by Organization Staff Size Small > large Medium > large Medium > large Medium > large Medium > large Medium > large

Note: Based on a scale where 1 = “to a very little extent” and 5 = “to a very large extent.” Greater numbers indicate greater average degrees that various HR practices add value to the business. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: RBL Group, University of Michigan Ross School of Business, SHRM, IAE School of Business, IMI, Tsinghua University, AHRI, and the National HRD Network. 2007 Human Resource Competency Study [unpublished data]

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that affect a company’s strategy, the overarching company culture or the organization as a whole typically remain seated at the center of HR leadership. True organizational effectiveness is not measured by the successful execution of a company’s employee assistance program nor how it administers its flexible spending accounts. While these are very important HR functions that clearly serve an organization’s employees, these functions are more tactical in nature and not, in a strategic sense, impactful to the achievement of business goals and objectives. In short, transactional excellence is necessary—but no longer sufficient—for HR today. From evaluating the survey results and reviewing ongoing commentary in the HR and business media, it has become clearer that HR functions that are viewed as tactical are some of the first components to be outsourced. There are exceptions—areas that are so key, so strategic (such as leadership development/executive coaching, succession planning, employee relations) that they must remain in-house. However, the key differentiator for HR will be whether they are viewed as tactical or strategic.” Numerous differences emerged in the sourcing of HR responsibilities when the data were analyzed by organization staff size and organization sector. These findings are shown in Table 6 through Table 11.
In-House HR Responsibilities

Top 5 Completely Outsourced HR Responsibilities
1) Employee assistance/counseling 2) Flexible spending account administration 3) Background/criminal background checks 4) Consolidated Omnibus Budget Reconciliation Act (COBRA) 5) Pension benefits administration

As illustrated in Table 6, HR professionals employed by small-staff-sized organizations were more likely to report in-house staffing of a number of HR responsibilities. Compared with HR professionals from large-staff-sized organizations, HR professionals

Table 6 | HR Responsibilities Staffed Completely In-House (by Organization Staff Size)
Overall Small (1 to 99 employees) 84% 95% 85% 50% 78% 63% 50% 44% 39% 20% 29% Medium (100 to 499 employees) 93% 89% 80% 54% 56% 51% 33% 32% 29% 30% 13% Large (500+ employees) 96% 83% 71% 73% 46% 41% 28% 26% 22% 15% 11% Differences by Organization Staff Size Medium, large > small Small > large Small > large Large > small, medium Small > medium, large Small > large Small > medium, large Small > large Small > large Medium > large Small > medium, large

Policy development and/or implementation (n = 451) Strategic business planning (n = 415) Organization development (n = 360) Payroll administration (n = 298) Employee relocation (n = 165) Recruitment/staffing of executives (n = 264) Executive development and coaching (n = 148) Health care benefits administration (n = 168) Temporary staffing (n = 136) Retirement planning (i.e., educating employees) (n = 98) Employee assistance/counseling (n = 73)

91% 90% 78% 59% 56% 54% 36% 33% 30% 23% 17%

Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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working at small-staff-sized organizations were more likely to report in-house staffing of strategic business planning, organization development, recruitment/staffing of executives, health care benefits administration and temporary staffing. Small-staffsized organizations were also more likely than either medium- or large-staff-sized organizations to provide in-house staffing of employee relocation (78% compared with 56% and 46%), executive development and coaching (50% compared with 33% and 28%) and employee assistance/counseling (29% compared with 13% and 11%). Retirement planning (i.e., educating employees) was more likely to be staffed in-house by medium-staff-sized firms (30%) than by large-staff-sized organizations (15%). Both large (96%) and medium organizations (93%) were more likely than small organizations (84%) to report that policy development and/or implementation was staffed in-house. By contrast, large organizations (73%) were more likely than either medium (54%) or small organizations (50%) to report carrying out payroll administration in-house. Several differences were identified when the in-house HR responsibility data were analyzed by employment sector. The HR responsibilities that differed by organization sector in the percentages of organizations that staffed them in-house were payroll administration, employee relocation, recruitment/staffing of executives, recruitment/staffing of employees (nonexecutives), work/life balance benefits administration, wellness programs, COBRA, health care benefits administration, temporary staffing and background/criminal background checks. Respondents from government agencies (76%) were more likely than those from privately owned for-profit organizations (53%) to report in-house staffing of payroll administration. HR professionals from publicly owned for-profit organizations (36%) were less likely than those from government agencies (87%), nonprofit organizations (76%) or privately owned for-profit organizations (65%) to report in-house staffing of employee relocation activities. HR professionals from nonprofit organizations (90%) were more likely than those from privately owned for-profit organizations (75%) or publicly owned for-profit organizations (74%) to report that staffing recruitment of nonexecutive employees was conducted in-house, whereas respondents from nonprofit organizations (61%) and privately owned for-profit organizations (56%) were more likely than those from publicly owned for-profit organizations (38%) to report that recruitment/staffing of executives was conducted in-house. Work/life balance benefits administration was more likely to be conducted in-house by nonprofit organizations (67%) than by publicly owned for-profit organizations (43%). Wellness programs were more likely to be staffed in-house by nonprofit organizations (64%) than by privately owned for-profit organizations (39%), government agencies (34%) or publicly owned for-profit organizations (28%). HR professionals from government agencies (56%) and nonprofit organizations (51%) were more likely than those from publicly owned for-profit organizations (31%) or privately owned for-profit organizations (31%) to report in-house staffing of responsibilities related to COBRA. Respondents from nonprofit organizations (43%) and privately owned forprofit organizations (38%) were more likely than those from publicly owned for-profit organizations (23%) to report that health care benefits administration was staffed in-house. HR professionals from nonprofit organizations and government agencies were more likely than those from publicly owned for-profit organizations to report in-house staffing of duties related to temporary staffing and performing background/criminal background checks. These data are shown in Table 7.

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Table 7 | HR Responsibilities Staffed Completely In-House (by Organization Sector)
Overall Payroll administration (n = 298) Employee relocation (n = 165) Recruitment/staffing of executives (n = 264) Recruitment/staffing of employees (nonexecutives) (n = 397) Work/life balance benefits administration (n = 177) Wellness programs (n = 149) Consolidated Omnibus Budget Reconciliation Act (COBRA) (n = 175) Health care benefits administration (n = 168) Temporary staffing (n = 136) Background/criminal background checks (n = 120) 59% 57% 54% 54% 53% 40% 36% Publicly Owned Privately Owned For-Profit For-Profit 60% 36% 38% 74% 43% 28% 31% 53% 65% 56% 75% 54% 39% 31% Nonprofit 62% 76% 61% 90% 67% 64% 51% Government 76% 87% 61% 86% 44% 34% 56% Differences by Organization Sector Government > privately owned for-profit Privately owned for-profit, nonprofit, government > publicly owned for-profit Privately owned for-profit, nonprofit > publicly owned for-profit Nonprofit > publicly owned for-profit, privately owned for-profit Nonprofit > publicly owned for-profit Nonprofit > publicly owned for-profit, privately owned for-profit, government Nonprofit > publicly owned for-profit, privately owned for-profit Government > publicly owned for-profit, privately owned for-profit Privately owned for-profit, nonprofit > publicly owned for-profit Nonprofit, government > publicly owned for-profit Nonprofit, government > publicly owned for-profit

33% 30% 26%

23% 19% 15%

38% 30% 25%

43% 45% 38%

25% 45% 43%

Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 8 | HR Responsibilities Outsourced Partially (by Organization Staff Size)
Overall Executive development and coaching (n = 203) Risk management/worker’s compensation (n = 221) Health care benefits administration (n = 201) Recruitment/staffing of executives (n = 199) Policy development and/or implementation (n = 40) Strategic business planning (n = 39) 50% 46% 40% 40% 8% 8% Small (1 to 99 employees) 36% 37% 32% 32% 14% 2% Medium (100 to 499 employees) 50% 49% 46% 41% 6% 10% Large (500+ employees) 60% 52% 41% 53% 4% 14% Differences by Organization Staff Size Large > small Large > small Medium > small Large > small Small > large Medium, large > small

Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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Partially Outsourced HR Responsibilities

Table 8 depicts the differences by organization staff size in the percentages of organizations that partially outsourced various HR responsibilities. According to HR professionals, large-staff-sized organizations were more likely than small-staff-sized organizations to have partially outsourced executive development and coaching (60% compared with 36%), risk management/worker’s compensation (52% compared with 37%), recruitment/staffing of executives (53% compared with 32%) and strategic business planning (14% compared with 2%). Medium organizations were more likely than small organizations to report partially outsourcing health care benefits administration (46% compared with 32%) and strategic business planning (10% compared with 2%). By contrast, HR professionals from small organizations (14%) were more likely than their counterparts at large organizations (4%) to report that policy development and/or implementation was partially outsourced. As shown in Table 9, differences emerged among organization sectors for HR responsibilities that were partially outsourced. HR professionals from government agencies (50%) were more likely than their counterparts at privately owned for-profit organizations (26%) to report that their human resource information systems (HRIS) development was partially outsourced. According to HR professionals, pension benefits administration was more likely to be partially outsourced by privately owned for-profit organizations (51%) than by publicly owned for-profit organizations (32%). Partial outsourcing of recruitment/staffing of executives and wellness programs was more likely to be reported by HR professionals from publicly owned for-profit organizations (54% and 47%, respectively) than by HR professionals from nonprofit organizations

Table 9 | HR Responsibilities Outsourced Partially (by Organization Sector)
Overall Pension benefits administration (n = 184) Recruitment/staffing of executives (n = 199) Wellness programs (n = 144) Human resource information systems (HRIS) development (i.e., software selection and implementation) (n = 131) Employee relocation (n = 75) Recruitment/staffing of employees (nonexecutives) (n = 104) 44% 40% 38% 30% Publicly Owned For-Profit 32% 54% 47% 33% Privately Owned For-Profit 51% 39% 39% 26% Nonprofit 48% 31% 21% 24% Government 32% 37% 44% 50% Differences by Organization Sector Privately owned for-profit > publicly owned for-profit Publicly owned for-profit > nonprofit Publicly owned for-profit > nonprofit Government > privately owned for-profit

26% 21%

35% 25%

19% 24%

24% 9%

13% 14%

Publicly owned for-profit > privately owned for-profit Publicly owned for-profit, privately owned for-profit > nonprofit

Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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(31% and 21%, respectively). Respondents from publicly owned for-profit organizations (35%) were more likely than those from privately owned for-profit organizations (19%) to report partially outsourcing responsibilities related to employee relocation. HR professionals from publicly owned for-profit organizations (25%) and privately owned forprofit organizations (24%) were more likely than those from nonprofit organizations (9%) to report that recruitment/staffing of nonexecutive employees was partially outsourced.

Table 10 | HR Responsibilities Outsourced Completely (by Organization Staff Size)
Overall Employee assistance/counseling (n = 263) Flexible spending account administration (n = 248) Temporary staffing (n = 112) Employee relocation (n = 52) Payroll administration (n = 48) 62% 60% 25% 18% 10% Small (1 to 99 employees) 49% 51% 20% 5% 14% Medium (100 to 499 employees) 65% 62% 21% 19% 10% Large (500+ employees) 70% 68% 37% 26% 2% Differences by Organization Staff Size Medium, large > small Large > small Large > small, medium Medium, large > small Small, medium > large

Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 11 | HR Responsibilities Outsourced Completely (by Organization Sector)
Overall Background/criminal background checks (n = 240) 52% Publicly Owned For-Profit 64% Privately Owned For-Profit 55% Nonprofit 45% Government 19% Differences by Organization Sector Publicly owned for-profit > government Privately owned for-profit > government Nonprofit > government Privately owned for-profit > nonprofit, government Publicly owned for-profit > nonprofit Publicly owned for-profit > privately owned for-profit, nonprofit Government > nonprofit Publicly owned for-profit > privately owned for-profit, nonprofit Publicly owned for-profit > privately owned for-profit

Consolidated Omnibus Budget Reconciliation Act (COBRA) (n = 228) Pension benefits administration (n = 138) Health care benefits administration (n = 135) Temporary staffing (n = 112) Employee relocation (n = 52)

46%

48%

52%

33%

28%

33% 27%

44% 39%

29% 24%

23% 11%

37% 35%

25% 18%

39% 29%

23% 15%

15% 0%

18% 0%

Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is based on the actual number of respondents who indicated that their organization supported each HR responsibility. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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Completely Outsourced HR Responsibilities

Table 10 shows the differences in the percentages of organizations by staff size that reported completely outsourcing various HR responsibilities. HR professionals from large- and medium-staff-sized organizations were more likely than those from smallstaff-sized organizations to report completely outsourcing employee assistance/ counseling (70% and 65% compared with 49%, respectively) and employee relocation (26% and 19% compared with 5%). Large organizations (68%) were more likely than small organizations (51%) to report completely outsourcing flexible spending account administration and were also more likely than either medium or small organizations (37% compared with 21% and 20%, respectively) to report completely outsourcing temporary staffing. By contrast, HR professionals at small organizations (14%) and medium organizations (10%) were more likely than their counterparts at large organizations (2%) to report completely outsourcing payroll administration. HR professionals from publicly owned for-profit organizations (64%), privately owned for-profit organizations (55%) and nonprofit organizations (45%) were more likely than their counterparts at government agencies (19%) to report completely outsourcing background/criminal background checks. Respondents from privately owned for-profit organizations (52%) were more likely than those from nonprofit organizations (33%) or government agencies (28%) to report completely outsourcing responsibilities related to COBRA. HR professionals from publicly owned for-profit organizations (44%) were more likely than those from nonprofit organizations (23%) to report completely outsourcing pension benefits administration. Employee relocation was more likely to be completely outsourced by publicly owned for-profit organizations (29%) than by privately owned for-profit organizations (15%). HR professionals from publicly owned for-profit organizations (39%) were more likely than those from privately owned forprofit organizations (24%) and those from publicly owned for-profit organizations and government agencies (both 35%) were more likely than their counterparts at nonprofit organizations (11%) to report completely outsourcing health care benefits administration. According to HR professionals, temporary staffing was more likely to be completely outsourced by publicly owned for-profit organizations (39%) than by privately owned for-profit organizations (23%) or nonprofit agencies (15%). These data are shown in Table 11.
Decisions About Sourcing HR Responsibilities

Given the myriad HR functional areas and the limits to most organizations’ HR department/function headcount, what factors contribute to decisions about sourcing HR responsibilities? When asked how their organizations determine which HR roles and/or responsibilities will be staffed within the organization rather than outsourced or eliminated, the largest percentage of HR professionals (50%) reported that the organization’s business strategy contributes to the decision. These data are shown Figure 1. This suggests that for a substantial percentage of organizations, HR function staffing decisions are aligned with business operating plans, providing support for a strategic partnership between HR and the organization as a whole. The next two largest percentages of HR professionals reported that competencies of HR staff (45%) and the organization’s workforce management needs (40%) determined which specific HR roles

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and/or responsibilities would be staffed, outsourced or eliminated. Only one out of 10 HR professionals responded that their organization made decisions about sourcing HR roles and/or functional areas based on HR consultant evaluations and/or advice (11%) or employee feedback and requests (11%), indicating that few organizations make HR staffing or outsourcing decisions based on input from outside of the organization or from the bottom up. Trellis Usher-Mays, founder and chief people strategist, T.R. Ellis Group LLC, and member of SHRM’s Organizational Development Special Expertise Panel, comments, “Corporate leaders and HR practitioners are wising up to the fact that the HR function is critical to driving sustainable business results. As HR continues to transform itself from a transactional to a strategic partner, it becomes even more important to make sure that practitioners are building skills that enable them to think strategically and systemically, build and manage relationships and thoroughly analyze organizational issues. Part of HR’s value proposition has to be our intimate knowledge of our internal

Figure 1 | How Do Organizations Decide Which HR Roles and/or Functional Areas Will Be Staffed?

Organization’s business strategy

50%

Competencies of HR staff

45%

Organization’s workforce management needs

40%

HR department staffing budget

36%

Ongoing established staffing of the role and/or responsibility

23%

Internal audit or review of HR processes

20%

Employee feedback and requests

11%

HR consultant evaluations and/or advice

11%

(n = 509) Note: Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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customers’ business and industry and not simply our functional HR expertise. The more closely aligned HR is to the organization’s strategic objectives, the more value it can add and the less we have to worry about being outsourced or eliminated.” Organization staff size has an impact on factors determining which HR roles and functional areas will be staffed within the organization. HR professionals from large organizations (46%) were more likely than their counterparts from small organizations (25%) to report that the HR department’s staffing budget was a factor in determining which HR roles/functional areas would be staffed. This finding may be related to the prevalence of HR specialists versus HR generalists in large organizations compared with small organizations. In addition, large organizations were more likely than small organizations or medium organizations to report that an internal audit or review of HR processes (32% compared with 13% and 16%, respectively) or HR consultant evaluations and/or advice (19% compared with 8% and 6%, respectively) contributed to their organizations’ decisions about staffing HR roles and/or functional areas. These findings are not surprising, given that large organizations may have more of a need as well as more resources such as time and money to allow them to undertake a formal internal audit of HR processes or contract the services of HR consultants to review HR processes. These data are depicted in Table 12. Organization sector also had an impact on factors determining the HR roles and/or functional areas to be staffed (Table 13). An organization’s business strategy factored into decisions about HR role/functional area staffing for 62% of publicly owned forprofit organizations compared with 45% of privately owned for-profit organizations and 38% of government agencies. Publicly owned for-profit organizations may be more likely to expect operating plan alignment across the organization’s divisions and departments, including human resource functions. More than two-thirds of HR professionals from government agencies (69%), compared with only about one-third of HR professionals from publicly owned for-profit organizations (35%), reported that competencies of HR staff were a factor in determining staffing of HR roles and/ or functional areas. This suggests that, to a certain extent, HR professionals who are employed in the government sector may have some degree of influence over the HR

Table 12 | Factors Determining the HR Roles and/or Functional Areas to Be Staffed (by Organization Staff Size)
Overall (n = 509) HR department staffing budget Internal audit or review of HR processes HR consultant evaluations and/ or advising 36% 20% 11% Small (1 to 99 employees) (n = 131) 25% 13% 8% Medium (100 to 499 employees) (n = 167) 37% 16% 6% Large (500+ employees) (n = 134) 46% 32% 19% Differences by Organization Staff Size Large > small Large > small, medium Large > small, medium

Note: Data sorted in descending order by “overall” column. Percentages do not total 100% due to multiple response options. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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responsibilities that will be staffed in-house through the experience that they bring to and/or attain in the position. HR consultant evaluations and/or advice determined staffing for HR roles and/or functional areas for 18% of publicly owned for-profit organizations compared with 8% of privately owned for-profit organizations. This finding may be due in part to publicly owned for-profit organizations having more resources available to engage the services of HR consultants.
Assignment of HR Responsibilities

How are HR responsibilities distributed amongst HR function and/or department staff? More than one-quarter of respondents (29%) reported that their organizations did not have more than one HR staff person, suggesting that all HR roles and/or responsibilities that were carried out in-house by their organizations were handled by a single HR function employee. This is logical, given that of the respondents who reported that their organizations did not have more than one HR staff person, 68% were from small-staff-sized organizations and 32% were from medium-staff-sized organizations. Among organizations with multiple HR staff, nearly two-thirds of HR professionals (63%) indicated that their HR staff simultaneously handled multiple HR functional areas for the organization, i.e., generalist roles. About one-quarter of respondents (24%) responded that their organization’s HR staff were hired into and advanced within single HR functional area tracks based on their experience and/or education. Just 1% of HR professionals reported that their HR staff had scheduled rotations among HR functional areas supported by the organization’s HR department/ function. These data, shown in Figure 2, indicate that HR professionals who are employed as specialists or within limited HR functional areas may have some degree of flexibility for selecting the responsibilities that they perform. Both nonprofit (42%) and privately owned for-profit organizations (38%) were more likely than government agencies (12%) and publicly owned for-profit organizations (11%) to report that their organizations did not have more than one HR staff person. Unsurprisingly, small organizations (65%) were more likely than medium organizations

Table 13 | Factors Determining the HR Roles and/or Functional Areas to Be Staffed (by Organization Sector)
Overall (n = 509) Organization’s business strategy Competencies of HR staff HR consultant evaluations and/or advising 50% Publicly Owned For-Profit (n = 109) 62% Privately Owned For-Profit (n = 221) 45% Nonprofit (n = 65) 52% Government (n = 41) 38% Differences by Organization Sector Publicly owned for-profit > privately owned for-profit, government Government > publicly owned for-profit Publicly owned for-profit > privately owned for-profit

45% 11%

35% 18%

49% 8%

46% 7%

69% 17%

Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Percentages do not total 100% due to multiple response options. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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(24%) and large organizations (1%), and medium organizations were more likely than large organizations, to report that their organizations did not have more than one HR staff person.6 Among organizations with multiple HR staff, differences emerged by organization staff size in the percentages of organizations that reported that their HR staff simultaneously handled multiple HR functional areas for the organization (Table 14). Medium organizations (71%) were more likely than large organizations (57%) to report that their HR staff held generalist roles. There were no significant differences by organization sector. More often than not, among organizations with multiple HR staff, some—if not all—of these staff operate from a single location. More than two-thirds of HR professionals from organizations with multiple HR staff (69%) reported that the organization’s HR department was primarily centralized (Figure 3). Another 21% indicated that they were split between corporate headquarters and field offices, and only 10% reported that their organization’s HR staff were primarily decentralized. For many organizations, HR departments/functions serve as default owners for responsibilities that are not directly HR-related but are necessary to operations and do not have a more suitable department match. In addition to their responsibilities related

Figure 2 | How Are HR Staff Roles and/or Responsibilities Assigned?

HR staff simultaneously handle multiple roles

63%

HR staff are hired into single HR functional tracks

24%

HR staff may request to switch HR functional area tracks

9%

HR staff have rotations among HR functional areas

1%

Other

3%

(n = 361) Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.” Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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to HR functions, one-half of HR professionals (50%) reported having other non-HR duties. This may include facilities, IT, administration and other responsibilities.7 HR professionals from small organizations (79%) were more likely than those from medium (48%) and large organizations (22%), and HR professionals from medium organizations were more likely than their counterparts from large organizations, to report that they had non-HR duties in addition to their HR responsibilities (Table 15). Organizations with fewer staff are more likely to assign cross-functional roles to HR departments or functions than larger organizations, which can more easily establish

Table 14 | F  actors Determining HR Staff Assignments of HR Roles and/or Responsibilities (by Organization Staff Size)
Overall (n = 361) HR staff simultaneously handle multiple HR functional areas for the organization (i.e., generalist roles) 63% Small (1 to 99 employees) (n = 50) 68% Medium (100 to 499 employees) (n = 136) 71% Large (500+ employees) (n = 138) 57% Differences by Organization Staff Size Medium > large

Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.” Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Figure 3 | Where Are HR Staff Located Within the Organization?

69%

21%

10%

Primarily centralized

Split between headquarters and field offices

Primarily decentralized

(n = 345) Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.” Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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departmental duty boundaries because they are likely to have other, more appropriate departments with available headcount for handling non-HR duties. HR professionals from privately owned for-profit organizations (59%) as well as those from nonprofit organizations (59%) were more likely than those from publicly owned for-profit organizations (37%) and government agencies (26%) to indicate having non-HR duties in addition to their HR responsibilities (Table 16). Staff size within the sectors may have an impact on the likelihood of HR functions or departments being tasked with non-HR related responsibilities. HR FUNcTION/DEParTmENT STaffING CHaNGES What are organizations’ planned headcount changes for the short-term future? Although the majority of HR professionals (72%) reported that their HR staff headcount will most likely remain the same during the next 12 months, one-quarter of respondents (25%) indicated that their HR staff headcount will grow during that timeframe (Figure 4). Very few organizations—just 3%—expected a decrease in HR staff numbers. Even in a slowing economy, HR functions or departments may be more resistant to downsizing due to the essential nature of their responsibilities on behalf of the organization’s workforce. This may be even more the case for organizations whose HR departments or functions are comprised of generalist roles and where multiple HR roles and responsibilities can be assigned to each HR staff person.

Table 15 | HR Staff Have Non-HR Duties (by Organization Staff Size)
Overall (n = 508) HR has non-HR duties 50% Small (1 to 99 employees) (n = 141) 79% Medium (100 to 499 employees) (n = 172) 48% Large (500+ employees) (n = 138) 22% Differences by Organization Staff Size Small > medium, large Medium > large

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 16 | HR Staff Have Non-HR Duties (by Organization Sector)
Overall (n = 508) HR has non-HR duties 50% Publicly Owned For-Profit (n = 114) 37% Privately Owned For-Profit (n = 234) 59% Nonprofit (n = 71) 59% Government (n = 42) 26% Differences by Organization Sector Privately owned for-profit > publicly owned for-profit, government Nonprofit > publicly owned for-profit, government

Note: Excludes HR professionals who responded “not sure” to this item and those from “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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HR professionals from large organizations (36%) were more likely than those from medium (21%) or small organizations (16%) to report that their organization’s HR staff headcount was expected to increase in the 12 months following the survey. Conversely, small organizations (82%) and medium organizations (76%) were more likely than large organizations (60%) to report that their organization’s HR headcount was expected to remain the same in the upcoming 12 months. These data are depicted in Table 17.

Figure 4 | Will the HR Staff Headcount Change in the Next 12 Months?
72%

25%

3% HR headcount will increase HR headcount will remain the same HR headcount will decrease

(n = 430) Note: Excludes HR professionals who responded “not sure” to this item. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 17 | HR Staff Headcount Changes Expected for Next 12 Months (by Organization Staff Size)
Overall (n = 430) HR headcount will increase HR headcount will remain the same HR headcount will decrease 25% 72% 3% Small (1 to 99 employees) (n = 141) 16% 82% 2% Medium (100 to 499 employees) (n = 172) 21% 76% 3% Large (500+ employees) (n = 138) 36% 60% 3% Differences by Organization Staff Size Large > small, medium Small > large Medium > large

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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As shown in Table 18, there were fewer differences in changes to HR headcount by organization sector. Although a small percentage of organizations overall expected a decrease in HR headcount, HR professionals from publicly owned for-profit organizations (8%) were more likely than those from privately owned for-profit organizations (1%) to report that their organization’s HR staff headcount was expected to decrease in the 12 months following the survey. Publicly owned for-profit organizations may be more sensitive to mergers, acquisitions and large-scale downsizing efforts that might include HR department staff as well as other line operations within the organization. Among HR professionals employed by organizations that expected to increase their number of HR staff over the next year, the largest percentage (49%) reported that their decision to hire additional HR staff was due to the HR department/function being understaffed for current workforce size. This is consistent with the traditional view of the HR department size as a ratio to the total number of organization employees. However, more than two of out five HR professionals (44%) that were expanding their HR functions/departments reported that the organizational business strategy created new priorities for HR roles and/or functions, requiring the hiring of additional HR staff. This finding, again, supports the notion that within many organizations, the HR function/department operations are closely aligned with the organization’s business operations. These data are illustrated in Figure 5. Among HR professionals employed by organizations that expected to increase their HR staff headcount in the next 12 months, those from publicly owned for-profit organizations (32%) were more likely than those from privately owned for-profit organizations (6%) to report that a shift in workforce demographics and/or needs contributed to the decision to hire additional staff (Table 19). The U.S. workforce is changing through an aging baby boom generation, the work/life balance demands of younger workers and an increasingly diverse general population. According to employees, benefits tied with compensation as the top-rated most important aspect contributing to job satisfaction.8 Further, workers aged 35 and younger and workers employed by large-staff-sized organizations placed the greatest importance on benefits

Table 18 | HR Staff Headcount Changes Expected for Next 12 Months (by Organization Sector)
Overall (n = 430) HR headcount will increase HR headcount will remain the same HR headcount will decrease 25% 72% 3% Publicly Owned For-Profit (n = 92) 27% 65% 8% Privately Owned For-Profit (n = 205) 25% 74% 1% Nonprofit (n = 63) 22% 76% 2% Government (n = 34) 18% 82% 0% Publicly owned for-profit > privately owned for-profit Differences by Organization Sector

Note: Excludes “other” organization sectors and HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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Figure 5 | Hiring Additional HR Staff: Which HR and Organizational Factors Matter?

HR department/function is understaffed for current workforce size

49%

Organizational business strategy created new priorities for HR roles and/or functions

44%

HR department/function is expanding in anticipation of increase in workforce

43%

Unaccompplished work projects require adding staff in order to meet business goals

23%

HR department/function is expanding to manage recruitment and hiring needs following high turnover in workforce

22%

HR department/function needs new or additional staff to manage the technology systems that support HR functional areas HR department/function staffing structure requires new or additional managers or executive-level staff Shift in workforce demographics and/or needs requires additional HR staff to manage related programs

18%

16%

12%

Previously outsourced HR functions are being pulled in-house

3%

(n = 107) Note: Includes HR professionals who indicated that their HR staff headcount would increase over the next 12 months. Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 19 | F  actors Contributing to Decision to Hire Additional HR Staff (by Organization Sector)
Overall (n = 107) Shift in workforce demographics and/ or needs requires additional HR staff to manage related programs 12% Publicly Owned For-Profit (n = 25) 32% Privately Owned For-Profit (n = 52) 6% Nonprofit (n = 14) 7% Government (n = 6) 0% Differences by Organization Sector Publicly owned for-profit > privately owned for-profit

Note: Includes HR professionals who indicated that their HR staff headcount would increase over the next 12 months. Excludes “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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as a factor in job satisfaction. Publicly owned for-profit organizations may be under more pressure to customize their benefits programs to meet the benefits demands of the workforce, potentially requiring specialized HR staff to manage them. HR’S ROLE WITHIN THE OrGaNIZaTION
Strategic vs. Transactional Role

How do HR professionals view their HR function/department’s role within their organization? As shown in Figure 6, nearly two-thirds of HR professionals (61%) viewed their HR function/department’s role as equally strategic and transactional. Onethird of respondents (33%) reported that their HR function/department’s role was primarily transactional, indicating that one out of three HR function/departments serve a traditional HR role within organizations. Only 6% of HR professionals viewed their HR function/department’s role within the organization as primarily strategic. There were differences by both organization sector and organization staff size in HR professionals’ perceptions of the HR function or department’s role. HR professionals from publicly owned for-profit organizations (10%) were more likely than their counterparts from privately owned for-profit organizations (3%) to report that they viewed their HR function or department as having a primarily strategic role. HR professionals from small organizations (42%) were more likely than those from large organizations (26%) to report that they viewed their HR function or department as having a primarily transactional role within their organization (Table 20). In smaller organizations, the HR function or department—which may be limited to a single employee—may have interactions with other staff that more often than not center around duties directly related to human capital management, contributing to a feeling

Related Research
Results from the SHRM 2007 in the percentages of organizations that devoted HR staff full time to change management programs. As shown below, HR professionals from large organizations (29%) were more likely than those from small organizations (12%) to have HR staff devoted full time to change management programs during major organizational changes.

Change Management Survey Report noted that there were differences by organization staff size

HR Staff Devoted Full Time to Change Management Programs (by Organization Staff Size)
Overall (n = 292) HR staff devoted full-time to change management programs 23% Small (1-99 employees) (n = 72) 12% Medium (100-499 employees) (n = 105) 19% Large (500+ employees) (n = 90) 29% Differences by Organization Staff Size Large > small

Note: Excludes HR professionals who indicated that HR was not involved in major changes in their organizations and those who responded “not sure” to this item. Source: SHRM 2007 Change Management Survey Report

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of having a primarily transactional role. Moreover, the organizational strategy of small organizations may be set by top management, with less opportunity for HR to be involved in shaping the strategy of the organization, particularly in the absence of senior-level HR staff. Of the differences according to organization staff size, Libby Anderson, M.S., SPHR, EDA Human Resource Services and member of SHRM’s Organizational Development Special Expertise Panel, notes, “My feeling is that the organization’s budget dictates the type of work, and while we know strategic work contributes to the bottom line, we are still working toward defining that in a tangible way. The smaller companies don’t see HR as strategic because they often have a

Figure 6 | How Do HR Professionals Perceive Their HR Function/Department’s Role Within the Organization?

61%

33%

6%

Primarily strategic

Equally strategic and transactional

Primarily transactional

(n = 468) Note: Excludes HR professionals who responded “not sure” to this item. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 20 | HR Professionals’ Perceptions of Their HR Function/Department’s Role Within the Organization (by Organization Staff Size)
Overall (n = 468) Small (1 to 99 employees) (n = 137) 5% 53% 42% Medium (100 to 499 employees) (n = 169) 4% 63% 33% Large (500+ employees) (n = 135) 7% 67% 26% Small > large Differences by Organization Staff Size

Primarily strategic Equally strategic and transactional Primarily transactional

6% 61% 33%

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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budget that doesn’t support an advanced level of HR professional. So they have HR people who don’t have as much experience and therefore are primarily transactional.  Therefore, more HR professionals have to augment their focus on strategy with more tangible (transactional) activities.” HR professionals’ perception of how HR’s role is viewed by various levels within the organization varied depending on level, as shown in Table 21. A larger percentage of HR professionals believed that the board of directors (15%), compared with other levels within the organization, perceived the organization’s HR department/ function as having a primarily strategic role. The board of directors’ involvement with the organization’s human capital management efforts may be limited to broad overviews of current activities and future directions rather than the details of the specific tasks or transactions. About two-thirds of respondents (65%) indicated that the organization’s C-suite and executive-level employees viewed HR’s role as equally strategic and transactional, and about one-quarter of respondents (26%) felt that the HR department/function was perceived by the C-suite and executives as having a primarily transactional role. Although 53% of HR professionals felt that manager-level employees perceived HR as having an equally strategic and transactional role within the organization and 45% believed that HR was perceived in a primarily transactional role by this staff level, nearly-three quarters of respondents (70%) indicated that nonmanagerial employees perceived HR as having a primarily transactional role within the organization. This perception may indicate a greater proportion of administrative interactions between HR departments or functions and rank-and-file employees compared with more multidimensional interactions between HR and other levels within the organization, particularly in organizations where HR is involved in strategic planning. HR may need to improve communication with rank-and-file employees regarding HR’s strategic capabilities and its value to the organization. According to Bill Young, SPHR, managing consultant, Leadership, Learning & Performance at Williams, and past member of SHRM’s Organizational Development Special Expertise Panel, “For many employees, HR is simply getting the paycheck on time or resolving a benefit question when it arises. It is only when HR interacts with leaders in crafting the people strategy does the true value of HR shine. Consequently, unless an employee is involved

Table 21 | HR Professionals’ Perceptions of How Various Groups View the HR Function/Department’s Role
Primarily Strategic HR professionals (n = 468) Board of directors (n = 303) C-suite and executive-level employees (n = 425) Manager-level employees (n = 462) Nonmanagerial employees (n = 443) 6% 15% 9% 2% 2% Equally Strategic and Transactional 61% 54% 65% 53% 28% Primarily Transactional 33% 31% 26% 45% 70%

Note: Excludes HR professionals who responded “not sure” to this item. Row percentages may not total 100% due to rounding. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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in the strategy development of an organization, the vast majority of HR he or she is exposed to is transactional and tactical.”    As illustrated in Table 22, HR professionals from large organizations (20%) were more likely than those from medium organizations (8%) to report that the board of directors viewed the HR function/department’s role as primarily strategic. Large organizations may be more likely to have a chief human resource officer or similar high-level position that participates in and contributes to strategic planning efforts involving the board of directors. Organization sector also had an effect on HR professionals’ views of the board of directors’ perceptions of the HR function/department’s role. HR professionals from publicly owned for-profit organizations (24%) were more likely than those from privately owned for-profit organizations (9%) to report that they believed that the board of directors viewed the HR function/department’s role as primarily strategic (Table 23). Publicly owned for-profit organizations may be more likely than privately owned for-profit organizations to have a business strategy that is heavily focused on gaining competitive advantage by leveraging talent management, an undertaking that HR typically leads and of which the board of directors is often keenly aware. Conversely, HR professionals from privately owned for-profit organizations (40%) were more likely than those from nonprofit organizations (19%) to report that they believed that the board of directors viewed the HR function/department’s role as primarily transactional.
Table 22 | HR Professionals’ Perceptions of Board of Directors’ Views of Organization’s HR Function/Department’s Role (by Organization Staff Size)
Overall (n = 303) Primarily strategic Equally strategic and transactional Primarily transactional 15% 54% 31% Small (1 to 99 employees) (n = 87) 13% 52% 36% Medium (100 to 499 employees) (n = 111) 8% 60% 32% Large (500+ employees) (n = 88) 20% 50% 30% Differences by Organization Staff Size Large > medium

Note: Excludes HR professionals who responded “not sure” to this item. Column percentages may not total 100% due to rounding. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 23 | HR Professionals’ Perceptions of Board of Directors’ Views of Organization’s HR Function/Department’s Role (by Organization Sector)
Overall (n = 303) Primarily strategic Equally strategic and transactional Primarily transactional 15% 54% 31% Publicly Owned For-Profit (n = 74) 24% 51% 24% Privately Owned For-Profit (n = 140) 9% 51% 40% Nonprofit (n = 52) 13% 67% 19% Government (n = 23) 13% 61% 26% Privately owned for-profit > nonprofit Differences by Organization Sector Publicly owned for-profit > privately owned for-profit

Note: Excludes HR professionals who responded “not sure” to this item and those from “other” organization sectors. Column percentages may not total 100% due to rounding. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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The findings indicate that organization staff size had an impact on nonmanagerial employees’ perceptions of HR’s role within the organization. Respondents from small (35%) and medium organizations (31%) were more likely than their counterparts from large organizations (18%) to report that nonmanagerial employees viewed HR as equally strategic and transactional (Table 24). By contrast, HR professionals from large organizations (81%) were more likely than HR professionals from medium (67%) or small organizations (63%) to report that nonmanagerial employees viewed HR’s role as primarily transactional. This suggests that HR professionals from large organizations are more apt to feel that nonmanagers’ perceptions of the HR department’s role are limited to the tasks performed. This may be particularly true for HR departments with specialist roles, where nonmanagerial employee interactions with specific HR staff are within a narrow range of functional areas or responsibilities.
HR Mentoring

In order for the human resource profession to be recognized for its contribution to business strategy and organizational success, non-HR staff and divisions within organizations need to be educated about the value to be brought to the organization through leveraging HR’s strategic capabilities. Moreover, individual HR practitioners need to have the opportunity to take on the roles beyond the traditional administrative tasks that not only are associated with HR but often limit perceptions of HR. Mentoring and/or advising has been cited as an important means through which HR professionals can inform others about HR’s role in business strategy as well as gain a better understanding about the organization’s business activities and learn how to form strategic connections between HR activities and business results.9 To what extent do HR professionals receive or provide mentoring about the ways that the HR function/ department can contribute to an organization’s business strategy? As shown in Figure 7, a slightly larger proportion of HR professionals have mentored others (59%) than have received mentoring (53%) while in their current position. Overall, just over one-half of HR professionals have been involved in mentoring in their current job. Mentoring activities could help contribute to emerging HR practitioners’ as well as non-HR staff’s understanding of the roles and competencies of HR and influence perceptions of HR as a key contributor to the organization’s business strategy. Further, mentoring and

Table 24 | HR Professionals’ Perceptions of Nonmanagerial Employees’ Views of Organization’s HR Function/Department’s Role (by Organization Staff Size)
Overall (n = 443) Small (1 to 99 employees) (n = 125) 2% 35% 63% Medium (100 to 499 employees) (n = 164) 2% 31% 67% 1% 18% 81% Small, medium > large Large > small, medium Large (500+ employees) (n = 131) Differences by Organization Staff Size

Primarily strategic Equally strategic and transactional Primarily transactional

2% 28% 70%

Note: Excludes HR professionals who responded “not sure” to this item. Column percentages may not total 100% due to rounding. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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advising among HR professionals may take place either within one organization or through networks and/or relationships built across organizations. Not surprisingly, HR professionals from small organizations were least likely to have mentored others about the ways that HR can contribute to the business strategy. Nearly three-quarters of HR professionals from large organizations (71%) and almost twothirds of those from medium organizations (62%) reported that they had mentored others about HR’s potential to contribute to the organization’s business strategy, compared with 41% of HR professionals from small organizations (Table 25). In smaller organizations, HR professionals may work more closely with the other business functions and may not need to establish formal mentoring relationships in order to foster understanding of how HR capabilities and competencies can contribute to the business strategy. This finding may also be tied to differences by organization staff

Figure 7 | Are HR Professionals Involved in Mentoring About HR’s Contribution to the Organization’s Business Strategy?

59% 53%

Received mentoring (n = 481)
Note: Excludes HR professionals who responded “not sure” to these items. Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Have mentored others (n = 470)

Table 25 | HR Professionals Have Mentored Others About Ways That HR Can Contribute to an Organization’s Business Strategy (by Organization Staff Size)
Overall (n = 470) Yes No 59% 41% Small (1 to 99 employees) (n = 132) 41% 59% Medium (100 to 499 employees) (n = 172) 62% 38% Large (500+ employees) (n = 138) 71% 29% Differences by Organization Staff Size Medium > small Large > small

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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size in how HR professionals view their HR function/department’s role, with HR professionals from smaller organizations more likely than their counterparts from larger organizations to report viewing this role as primarily transactional. As illustrated in Figure 8, HR professionals received mentoring from a variety of sources in their current position. More than three-quarters of HR professionals (77%) indicated that they were mentored by other HR professionals, including chief HR officers and other top-level HR staff, about ways that HR could contribute strategically to the organization’s business strategy. Mentoring among HR professionals might take place within a single organization in a direct-report relationship or across organizations as HR practitioners form networks within the profession. One-quarter of respondents (25%) received mentoring from the CEO or president of the organization. Other sources of mentoring included legal counsel and attorneys, consultants and other SHRM members. The sources from which HR professionals have received mentoring may be indicative of their organization’s business strategy and/or operating goals. Further, the sources of mentoring may reflect HR professionals’ interests in business operations or special areas within human resource management (e.g., legal issues in workforce management). HR professionals’ sources of mentoring varied according to organization staff size, as shown in Table 26. HR professionals from large organizations were more likely

Figure 8 | Who Has Mentored HR Professionals About HR’s Contribution to the Organization’s Business Strategy?

77%

25%

10%

9% 1%

11%

Other HR professionals
(n = 253)

CEO/president

CFO

CIO

COO

Others

Note: Excludes HR professionals who had not received mentoring. Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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than HR professionals from small organizations to report having received mentoring from other HR professionals (89% compared with 63%). The organization’s CEO/ president and chief financial officer were more likely to be sources of mentoring for HR professionals in small organizations than for HR professionals in large organizations (24% compared with 11%, and 17% compared with 4%, respectively). Arguably, large organizations are more likely than small organizations to have multiple HR staff, including higher-level HR professionals who are able to provide mentoring. By contrast, HR professionals in small organizations may not have other HR professionals within the organization, but they work directly with the CEO/president or chief financial officer, making these positions the logical sources of mentoring. Table 27 shows the differences in sources of mentoring among employment sectors. The vast majority of HR professionals from government agencies (90%) and publicly owned for-profit organizations (87%), compared with slightly more than one-half of HR professionals from nonprofit organizations (56%), received mentoring from other HR professionals. This finding may be partially due to the size of organizations within the employment sectors, as publicly owned for-profit organizations may be more likely to have multiple HR staff in ratio to larger numbers of total staff. HR professionals from privately owned for-profit organizations (13%) were more likely than their

HR Perspective
According to the survey report findings, 77% of HR professionals who received mentoring on ways that HR can contribute strategically to business strategy indicated that they have received mentoring from other HR professionals. Informal mentoring, in fact, has a number of excellent advantages: it is a high-level, targeted coaching; it provides different types of networking opportunities (e.g., professional and social contacts); it helps to strengthen workplace culture through one-on-one interactions across the organization; and it often results in a lasting professional relationship. The ideal mentor is committed to the development, growth and advancement of people. Additional mentor qualifications include being regarded as successful in one’s profession, having strong interpersonal and leadership skills and patience, willingness to take risks, and sharing credit for work well done with others. The fictitious mini-case study below presents a scenario that could occur in a number of organizations and is an example of an opportunity where leaders in the HR community can ‘give back’ to the HR management, through mentoring, by providing guidance to HR professionals who want to grow and perform effectively. A newly promoted director of HR worked for a medium-sized organization of 270 employees—a domestic privately-owned for-profit credit union. Last year, the company developed a competitive business strategy, with a major goal focused on leadership. As a result, a leadership development program was successfully rolled out that year. As a follow-up to that initiative, HR was to establish a robust succession plan. While the director of HR was a seasoned professional with 10 years of progressive HR generalist background, she did not have experience with strategic succession plans. Further, her mentor, the prior director of HR, had recently left the organization. In view of the importance of this strategic goal—and the subsequent high expectations placed upon her—the director of HR needed to be proactive and find a mentor—quickly! She did her homework and learned that many firms were not focusing on succession planning, as confirmed by the SHRM 2006 Succession Planning Survey Report, where only 29% of companies reported having a formal succession plan in place.10 However, she could not afford to fail, and so she promptly set out to locate a mentor with specific qualifications: 1) a results-oriented coach; 2) experience developing succession plans; 3) immediate availability

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counterparts from publicly owned for-profit organizations (1%) to report that they received mentoring from a chief information officer.
HR’s Impact

HR professionals were asked to indicate the extent to which they agreed with various statements about their organization’s HR department/function (Figure 9). These statements were based on core HR competencies derived from the 2007 Human Resource Competency Study.12 Nearly all respondents strongly agreed or agreed that their HR departments/functions carry out the administrative/transactional needs of managing the organization’s workforce (97%), understand the core of the organization’s business (96%) and are responsive to employees of all levels within the organization (95%). The lowest percentages of HR professionals strongly agreed or agreed that their HR departments/functions contributed to the strategic vision and direction for the organization (79%), had a direct impact on business processes (75%) and integrated talent management initiatives with business strategy (74%). These findings suggest high levels of HR competence in the Operational Executor and Business Ally roles. HR department and function competencies in most need of development overall include those required of the Credible Activist and Strategy Architect roles. Behaviors that define competency in these roles include leveraging

for mentoring sessions; and 4) a willingness to share personal experiences relevant to her goal. Through networking at her local SHRM chapter, she was able to identify a highly recommended mentor. This individual, vice president of human resources at a local bank, had worked in the financial sector for nearly 20 years and was well-respected in the HR community. When she contacted him and explained her situation, the vice president accepted her request and promptly set up their first session. Over the next five weeks, the director of HR worked diligently with her mentor. Their sessions focused on the development of a detailed succession plan within two months, to be fully integrated into the corporate culture by year’s end. During these coaching sessions, the vice president challenged her to let go of her fear of failure. She began to gain confidence in the reality of successfully achieving her goal. For example, she already had the support of the CEO and top management for this initiative, an organizational priority. In fact, two primary steps—having clearly defined leadership criteria and a plan to find, retain and motivate future leaders—had been developed and set in motion in the leadership development program. Under the guidance of her mentor, the director of HR

developed an action plan to identify the credit union’s critical leadership roles (including the staff holding these positions and their anticipated retirement dates), create a projected organizational chart, establish a process to identify high-potential leaders who could fill these positions, and define measures of success for each stage of the succession plan.11 Ultimately, by taking a proactive approach to her goal, the director of HR was not only successful but also gained a greater appreciation of the power of effective networking, an expanded awareness of organizational politics and culture, a strong professional friendship and ‘mentor for life,’ and a substantial bonus award for work well done. As highlighted in the survey results, HR’s strategic role in the organizational context has a substantial influence on business success. Through targeted coaching with an experienced mentor, HR professionals can decrease their learning curve, widen their professional network and increase their ability to contribute to the organization’s business strategy.

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relationships—both within and outside the company—and being actively involved in creating a forward-looking business strategy and thus delivering business results. Ernest Gundling, president of Aperian Global and member of SHRM’s Organizational Development Special Expertise Panel, observes, “Overall, the survey results suggest that at least as seen through the lens of HR professionals themselves, HR is now fulfilling the multiple roles suggested by Ulrich. For instance, HR is not only responding to administrative/transactional needs but, in most cases, is also in a position to understand the real business needs of the organization and to make a contribution to strategy, organizational culture and business processes. Also, the results suggest that there is still more work to be done, particularly in the important areas of ensuring that talent management initiatives are fully integrated with business strategy and in impacting business processes.” As shown in Table 28, HR professionals from small and medium organizations reported greater average agreement with the statement that their HR departments were responsive to employees of all levels within the organization. This indicates that HR professionals from large organizations feel limited in their approach to some levels within the organization, possibly as an effect of being more likely to be engaged in strategic roles within the organization and less likely to be focused solely on serving the day-to-day transactional needs of employees.

Table 26 | Sources of Mentoring on HR’s Contribution to an Organization’s Business Strategy (by Organization Staff Size)
Overall (n = 253) Small (1 to 99 employees) (n = 68) 63% 42% 17% Medium (100 to 499 employees) (n = 104) 77% 25% 10% Large (500+ employees) (n = 78) 89% 11% 4% Differences by Organization Staff Size Large > small Small > large Small > large

Other HR professionals CEO/president Chief financial officer

77% 25% 10%

Note: Excludes HR professionals who had not received mentoring. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 27 | Sources of Mentoring on HR’s Contribution to an Organization’s Business Strategy (by Organization Sector)
Overall (n = 253) Other HR professionals Chief information officer 77% 9% Publicly Owned For-Profit (n = 72) 87% 1% Privately Owned For-Profit (n = 120) 75% 13% Nonprofit (n = 39) 56% 14% Government (n = 20) 90% 5% Differences by Organization Sector Publicly owned for-profit, government > nonprofit Privately owned for-profit > publicly owned for-profit

Note: Excludes HR professionals who had not received mentoring and those from “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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Defining the Six Competencies
Credible Activist: The HR professional is both credible (respected, admired, listened to) and active (offers a point of view, takes a position, challenges assumptions). Culture and Change Steward: The HR professional recognizes, articulates and helps shape a company’s culture. As stewards of culture, HR professionals respect the past culture and also can help to shape a new culture. […] They develop disciplines to make changes happen throughout the organization. This may include implementation of strategies, projects or initiatives. Talent Manager/Organization Designer: The HR professional masters theory, research and practice in both talent management and organization design. Talent management focuses on competency requirements and how individuals enter and move up, across or out of the organization. Organization design focuses on how a company embeds capability (for example, collaboration) into the structure, processes and policies that shape how an organization works. Strategy Architect: The HR professional has a vision for how the organization can “win” in the marketplace, now and in the future. He or she plays an active part in the establishment of the overall strategy to deliver on this vision. This means recognizing business trends and their impact on the business, forecasting potential obstacles to success and facilitating the process of gaining strategic clarity. The HR professional also contributes to the building of the overall strategy by linking the internal organization to external customer expectations. Operational Executor: The HR professional executes the operational aspects of managing people and organization. Policies need to be drafted, adapted and implemented. Employees also have many administrative needs (e.g., to be paid, relocated, hired and trained). HR professionals ensure that these basic needs are efficiently dealt with through technology, shared services and/or outsourcing. Business Ally: HR professionals contribute to the success of a business by knowing the social context or setting in which their business operates. They also know how the business makes money, which we call the value chain of the business: who customers are, why they buy the company’s products or services. Finally, they have a good understanding of the parts of the business (finance, marketing, research and development, engineering), what they must accomplish and how they work together, so that they can help the business organize to make money.
Source: Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008). HR competencies: Mastery at the intersection of people and business. Alexandria, VA: Society for Human Resource Management.

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HR Metrics

To what extent are organizations calculating and tracking measurable outcomes of HR activities? According to HR professionals, about one-half of HR departments/ functions (49%) had formal (i.e., documented and established) systems and processes in place to collect HR metrics and/or measurement data (Figure 10). The remainder of organizations either informally collected HR metrics or did not have any processes or systems for collecting HR metrics, indicating a gap area for possible future growth for the HR profession. HR metrics and measurement data, such as cost-per-hire and turnover rates, can help organizations understand the impact of HR activities. As shown in Table 29, more than one-half of HR professionals from large (57%) and medium organizations (55%) reported that their organizations had formal systems and

Figure 9 | Agreement That the Following Statements Reflect the Organization’s HR Function/Department

Conducts the administrative/transactional needs of managing the organization’s workforce (n = 480)

97%

Understands the core of the organization’s business (n = 477)

96%

Responsive to employees of all levels (n = 476)

95%

Facilitates change within the organization (n = 466)

84%

Actively shapes the organization’s culture (n = 458)

84%

Contributes to the strategic vision (n = 459)

79%

Has a direct impact on business processes (n = 442)

75%

Integrates talent management initiatives with business strategy (n = 426)

74%

Note: Percentages do not total 100% due to multiple response options. Includes responses of “agree” or “strongly agree.” HR professionals who responded “not sure” were excluded from analysis. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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processes in place to collect HR metrics, compared with less than one-third of HR professionals from small organizations (31%). While these data do not preclude the possibility that HR metrics are collected on an informal basis, they suggest that small organizations may be less likely to have a measure of the impact of their HR activities. According to HR professionals, almost two-thirds of publicly owned for-profit organizations (61%) had formal systems and process in place to collect HR metrics, compared with 41% of privately owned for-profit organizations that had such systems (Table 30). Publicly owned firms may be under more pressure to have a measure of the impact of their HR activities—as well as other functional/departmental activities due to shareholder accountability—and thus may be more likely to implement formal processes for collecting these data. Beyond measuring the effectiveness of HR activities on HR functional areas (e.g., recruiting, retention), HR metrics can give organizations a picture of how HR activities support the organization’s financial and operating goals. Figure 11 shows that among organizations that had formal systems and processes for collecting HR metrics, 52% reported formally calculating the impact of HR activities on measurable aspects of business performance such as profits, client retention and product quality. HR professionals can help underscore the importance of the HR function within the organization and potentially garner more financial resources and management support for HR activities by demonstrating, through the use of metrics, the value that these activities

Table 28 | Average Agreement With Statements About Organization’s HR Function/Department (by Organization Staff Size)
Overall (n = 476) Small (1 to 99 employees) (n = 139) 3.53 Medium (100 to 499 employees) (n = 172) 3.49 Large (500+ employees) (n = 139) 3.29 Differences by Organization Staff Size Small, medium > large

Responsive to employees of all levels

3.44

Note: On a scale where 1 = “strongly disagree” and 4 = ‘”strongly agree;” higher numbers indicate greater average agreement. HR professionals who responded “not sure” were excluded from analysis. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 29 | Organization Has Formal Systems and Processes for Collecting HR Metrics (by Organization Staff Size)
Overall (n = 464) Yes No 49% 51% Small (1 to 99 employees) (n = 136) 31% 69% Medium (100 to 499 employees) (n = 170) 55% 45% Large (500+ employees) (n = 133) 57% 43% Differences by Organization Staff Size Medium > small Large > small

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

39

bring to the organization through their direct impact on business performance.

Figure 10 | D  oes the HR Department Have Formal Systems and Processes for Collecting HR Metrics?

Organization staff size had an effect on the likelihood of formally calculating the impact of HR activities on business performance. HR professionals from large organizations (61%) were more likely than their counterparts from medium organizations (42%) to report that their HR departments formally calculated the impact Yes of HR activities on the organization’s business performance (Table 49% 31). Large organizations may be more likely to use a balanced scorecard approach to measuring organizational performance and, in turn, may be more likely to expect their HR departments No 51% to provide metrics or measurements demonstrating the impact of their activities within the organization. According to Charity Hughes, MSOD, SPHR, consultant with Nationwide Insurance Company and member of SHRM’s Organizational Development Special Expertise Panel, “It is no surprise that larger organizations (n = 464) are more astute at documenting and reporting the impact of Note: Excludes HR professionals who responded “not sure” to this item. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, HR activity. Senior leaders realize that the most costly expense 2008) as well as the greatest asset an organization has is its workforce. Larger organizations tend to have more stakeholders. The more stakeholders an organization has—such as customers, employees, market analysts, political interest groups and investors—the demand for information regarding

Related Research
The finding illustrated in Table 28 is consistent with the results of the 2007 Human Resource Competency Study assessing HR professionals’ competencies in various roles that HR occupies within organizations.13 Compared with HR professionals from large organizations, HR professionals from medium organizations reported greater average degrees of HR professional competency to play an employee advocate role. HR professionals from large organizations may be serving larger numbers of employees for very specific needs (i.e., when in specialist roles) or serving the organization overall through strategic functions; therefore, this group of HR professionals may feel somewhat disconnected from the day-to-day needs of the organization’s workforce.

HR Professionals’ Average Degree of Competency to Play Various Roles (by Organization Staff Size)
Small (1-99 employees) (n = 26) Employee Advocate: pay attention to the day-to-day requirements of employees 4.40 Medium (100-499 employees) (n = 36) 4.56 Large (500+ employees) (n = 381) 4.16 Differences by Organization Staff Size Medium > large

Note: Greater numbers indicate greater average degrees of competency. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: 2007 Human Resource Competency Study: RBL Group, University of Michigan Ross School of Business, SHRM, IAE School of Business, IMI, Tsinghua University, AHRI, and the National HRD Network [unpublished data]

40

operations increases. Stakeholders want to ensure that all resources are appropriately utilized.”
Tracking Staff Hours

Figure 11 |  Does the HR Department Formally Calculate the Impact of HR Activities on Business Performance?

According to HR professionals, only about one in three organizations (38%) tracked billable hours for any part of their staff (Figure 12). These organizations may have different administrative and workforce management needs that influence the HR department/function’s operation, including which functional areas are critical to the organization and the sourcing of related responsibilities as well as the primary role or roles that HR occupies within the organization. Differences emerged when the data were analyzed by organization staff size. HR professionals reported that small organizations (49%) were more likely than large organizations (26%) to track billable hours for any portion of their staff (Table 32). Organizations that include positions for which hours are tracked and billed back to clients may be more likely to be concentrated in selected industries, such as legal services and consultancies, that tend to operate as firms with smaller rather than larger numbers of staff.

Yes 52%

No 48%

(n = 198) Note: Excludes HR professionals from organizations that do not have formal systems and/ or processes in place to collect HR metrics and those who responded “not sure” to this item. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 30 | Organization Has Formal Systems and Processes for Collecting HR Metrics (by Organization Sector)
Overall (n = 464) Yes No 49% 51% Publicly Owned For-Profit (n = 109) 61% 39% Privately Owned For-Profit (n = 225) 43% 57% Nonprofit (n = 68) 53% 47% Government (n = 41) Differences by Organization Sector Publicly owned for-profit > privately owned for-profit

41% 59%

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 31 | HR Department Formally Calculates the Impact of HR Activities on Business Performance (by Organization Staff Size)
Overall (n = 198) Yes No 52% 48% Small (1 to 99 employees) (n = 37) 46% 54% Medium (100 to 499 employees) (n = 79) 42% 58% Large (500+ employees) (n = 70) 61% 39% Differences by Organization Staff Size Large > medium

Note: Excludes HR professionals from organizations that do not have formal systems and/or processes in place to collect HR metrics and those who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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Further, there were differences by organization sector in the percentages of organizations that tracked billable hours (Table 33). HR professionals employed by privately owned for-profit organizations Figure 12 |  Does the Organization Track (48%) were more likely than their counterparts in publicly owned Billable Hours for Its Staff? for-profit organizations (26%) to indicate that their organizations tracked billable hours for staff. Tracking billable hours helps organizations with budget forecasting efforts and calculating the actual profit from various income streams—activities that may be of more necessity for privately owned firms. Yes
Obstacles to HR Effectiveness
38%

What organizational factors hinder HR efforts and limit HR’s effectiveness in the organization? The largest percentage of HR professionals (56%) reported that HR’s effectiveness was limited by the budget available for HR initiatives. This may include money for developing human resource information systems, employee rewards and recognition, training and development, and wellness programs. Nearly one-half of respondents (46%) reported that available headcount for HR initiatives was a factor limiting HR’s effectiveness, suggesting that some organizations may feel obligated to sacrifice certain HR initiatives due to inadequate staff resources within the department or function. Only 12% of HR professionals reported that lack of support of HR initiatives by

No 62%

(n = 419) Note: Excludes HR professionals who responded “not applicable” or “not sure” to this item. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 32 | Organization Tracks Billable Hours for Its Staff (by Organization Staff Size)
Overall (n = 419) Yes No 38% 62% Small (1 to 99 employees) (n = 131) 49% 51% Medium (100 to 499 employees) (n = 154) 38% 62% Large (500+ employees) (n = 117) 26% 74% Differences by Organization Staff Size Small > large

Note: Excludes HR professionals who responded “not applicable” or “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

Table 33 | Organization Tracks Billable Hours for Its Staff (by Organization Sector)
Overall (n = 419) Yes No 38% 62% Publicly Owned For-Profit (n = 94) 26% 74% Privately Owned For-Profit (n = 214) 48% 52% Nonprofit (n = 59) 31% 69% Government (n = 38) 32% 68% Differences by Organization Sector Privately owned for-profit > publicly owned for-profit

Note: Excludes HR professionals who responded “not applicable” or “not sure” to this item and those from “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered this question using the response options provided. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

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nonmanagerial employees was a factor limiting HR’s effectiveness in their organization. These data are presented in Figure 13. According to Colleen Mills, Ph.D., organizational psychologist and executive coach, Fast Lane Coaching, and member of SHRM’s Organizational Development Special

Related Research
Previous SHRM research has identified differences by organization staff size in the percentages of HR departments that track metrics for various organizational activities. According to HR professionals who responded to the SHRM 2006 Succession Planning Survey, nearly two-thirds of HR departments (64%) used metrics to support the organization’s succession planning efforts, although there were differences by organization staff size in the percentages of HR departments that have this responsibility.14 HR professionals from large-staff-sized organizations (72%) were more likely than those from small organizations (46%) to report that their HR departments were responsible for tracking data to support the succession planning process. HR departments in large Further, differences emerged by organization staff size in the percentages of HR departments that conducted pre-implementation assessments of the potential impact organizations (73%) were also more likely than HR departments in small organizations (45%) to have responsibility for identifying potential succession gaps. of major organizational change. According to HR professionals who responded to the SHRM 2007 Change Management Survey, respondents from large organizations (61%) were more likely than those from medium organizations (43%) to report that HR analyzed the potential impact of the organizational change on stakeholders prior to implementation of the change.15

HR Department Responsibilities in the Succession Process (by Organization Staff Size)
Overall (n = 223) Tracking data to support the succession planning process Identifying potential succession gaps 64% 62% Small Medium (1 to 99 employees) (100 to 499 employees) 46% 45% 63% 61% Large (500+ employees) 72% 73% Differences by Organization Staff Size Large > small Large > small

Note: Data sorted in descending order by “overall” column. Includes only HR professionals whose organizations had either a formal succession plan or an informal succession plan. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: SHRM 2006 Succession Planning Survey Report

HR Roles During Major Organizational Changes (by Organization Staff Size)
Overall (n = 316) Analyzing potential impact of change on stakeholders (pre-implementation) 51% Small (1-99 employees) (n = 72) 46% Medium (100-499 employees) (n = 113) 43% Large (500+ employees) (n = 98) 61% Differences by Organization Staff Size Large > medium

Note: Data sorted in descending order by “overall” column. Excludes HR professionals who indicated that their HR departments were not involved in processes related to major changes in their organizations. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: SHRM 2007 Change Management Survey Report

43

Expertise Panel, “While HR has made great strides over the last several years getting a seat at the table, many organizations still feel that the non-compliance services offered by HR are a ‘nice to have’ versus a ‘must have.’ This belief definitely plays a role during the budget allocation process, especially during hard economic times. The differences based on company size are most likely a reflection of the role HR plays in the organization. Many small organizations focus much of their budget dollars and headcount on core HR functions such as recruiting, compensation/benefits and EEO compliance. These HR functions are often more tactical in nature and critical to the day-to-day operation of the business. As an organization grows, the breath and depth of HR initiatives extend beyond the core HR functions into what many business leaders consider the ‘soft’ HR offerings. These offerings tend to be more strategic in nature and include programs such as leadership development, talent management and succession planning. The linkage between these types of HR initiatives and organizational success is less immediate and tangible, thus making funding for these types of project less likely during challenging economic times.” SHRM Organizational Development Special Expertise Panel member Ken Moore of Ken Moore Associates adds, “I see a strong correlation between the lack of funding and the sense of value that CEOs place on the HR initiatives.

Figure 13 | What Limits HR’s Effectiveness?

Available budget for HR initiatives

56%

Available headcount for HR initiatives

46%

Management/executive team’s perception/support of HR initiatives

37%

CEO’s perception/support of HR initiatives

23%

Nonmanagerial employees’ perception/support of HR initiatives

12%

(n = 470) Note: Percentages do not total 100% due to multiple response options. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

44

Budget items that provide definitive value to the organization are usually funded— regardless of the size of the organization. HR’s existence as an internal asset is being challenged by intense competitive business pressures that are forcing CEOs to rethink their strategies just to survive, let alone prosper.” As shown in Table 34, HR professionals employed by large organizations were more likely than their counterparts employed by small organizations to report that available budget for HR initiatives (65% compared with 49%) and available headcount for HR initiatives (56% compared with 35%) were factors limiting HR’s effectiveness in their organizations. These findings are counterintuitive, as larger organizations clearly have more staff resources and may also have more financial resources earmarked for HR initiatives than organizations with fewer than 100 employees. It may be possible that a larger workforce requires greater resources. Large organizations may be well advised to examine their HR-staff-to-general-staff ratio in light of needed HR initiatives and increase HR staffing as necessary.

Table 34 | F  actors Limiting HR’s Effectiveness (by Organization Staff Size)
Overall (n = 470) Available budget for HR initiatives Available headcount for HR initiatives 56% 46% Small (1 to 99 employees) (n = 140) 49% 35% Medium (100 to 499 employees) (n = 172) 58% 45% Large (500+ employees) (n = 137) 65% 56% Differences by Organization Staff Size Large > small Large > small

Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences. Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)

45

Conclusions

How HR functions are viewed within organizations is dependent on several factors such as organization staff size, employment sector and the dynamics of the organization and its operations. Crossing over from the traditional view of HR as a primarily administrative role to an increasingly strategic role involves not only the organization seeing the value in HR’s contribution, but also HR’s ability, as a field, to assertively move beyond a focus on administrative responsibilities and assume a directive role to prove its impact on the business strategies and financials through the collection of solid measurements attributed directly to HR’s role. HR is positioned to contribute to the organization’s business strategy through aligning HR functional areas with the organization’s priorities. HR professionals can apply their advance awareness of workforce trends such as recruiting difficulty and new-hire compensation changes to their talent management activities, including recruiting and retention efforts. Further, HR can lead the organization in planning for the future through succession planning and leadership development. HR professionals’ most frequently cited limitations to HR’s effectiveness are lack of budget and lack of HR staff for HR initiatives. Signs that the organization is ready for HR to become a key contributor to developing and implementing organizational strategy may include investment of more resources in HR. Collecting HR metrics is the best way for an HR function and/or department to prove the impact of HR activities on the organization’s business operations. HR professionals also need to be aware of the various ways HR can assist the organization in meeting its goals. Mentoring, particularly cross-departmental mentoring, can help HR professionals become strategic contributors to the organization’s business strategy by increasing their understanding of other key functions within the organization. Exhibiting a willingness to expand focus and gain broad understanding not only of HR functions but also of the business operations will increase HR’s scope of influence and promote recognition of HR for having the potential to support and enhance organizational operations.

HR is positioned to contribute to the organization’s business strategy through aligning HR functional areas with the organization’s priorities.

47

Demographics

Organization Staff Size
Small (1 to 99 employees) Medium (100 to 499 employees) Large (500+ employees) 31% 39% 30%

Industry
Services (profit) Manufacturing (durable goods) Health Government Educational services Finance High-tech 20% 13% 12% 7% 6% 6% 6% 5% 5% 5% 4% 3% 2% 2% 2% 1% 2%

(n = 462) Source: SHRM 2008 HR’s Evolving Role in Organizations and Its Impact on Business Strategy

HR Department Staff Size
1 to 4 5 to 9 10 to 24 25 to 49 50 to 99 100 or more 59% 18% 11% 3% 4% 5%

Manufacturing (nondurable goods) Services (nonprofit) Wholesale/retail trade Insurance Construction and mining/oil and gas Telecommunications Transportation Utilities Newspaper publishing/broadcasting Other

(n = 462) Source: SHRM 2008 HR’s Evolving Role in Organizations and Its Impact on Business Strategy

Organization Sector
Privately owned for-profit organization Publicly owned for-profit organization Non-profit organization Government agency Other 49% 24% 15% 9% 4%

(n = 486) Note: Percentages do not total 100% due to rounding. Source: SHRM 2008 HR’s Evolving Role in Organizations and Its Impact on Business Strategy

(n = 485) Note: Percentages do not total 100% due to rounding. Source: SHRM 2008 HR’s Evolving Role in Organizations and Its Impact on Business Strategy

48

Appendix

NOTES aNd CavEaTS Number of respondents: The number of respondents (indicated by “n” in figures and tables) varies from table to table and figure to figure because some respondents did not answer all of the questions. Individuals may not have responded to a question on the survey because the question or some of its parts were not applicable or because the requested data were unavailable. This also accounts for the varying number of responses within each table or figure. Differences: Conventional statistical methods were used to determine if observed differences were statistically significant (i.e., there is a small likelihood that the differences occurred by chance). Therefore, in most cases, only results that were significant are included, unless otherwise noted. Generalization of results: As with any research, readers should exercise caution when generalizing results and take individual circumstances and experiences into consideration when making decisions based on these data. While SHRM is confident in its research, it is prudent to understand that the results presented in this survey report are only truly representative of the sample of HR professionals responding to the survey. Confidence level and margin of error: A confidence level and margin of error give readers some measure of how much they can rely on survey responses to represent all of SHRM members. Given the level of response to the survey, SHRM is 95% confident that responses given by respondents can be generalized to all SHRM members with a margin of error of approximately 4%. For example, 50% of HR professionals reported that they performed non-HR duties in addition to their HR-related job functions. With a 4% margin of error, the reader can be 95% certain that between 46% and 54% of all SHRM members would report that they had non-HR duties. It is important to know that as the sample size decreases, the margin of error increases, and therefore the margin of error for each individual question will vary depending on the number of responses to that particular question.

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Endnotes

1

Society for Human Resource Management. (2008). The varying roles of HR: A look at HR by organization staff size. Retrieved from www.shrm.org/surveys Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008). HR competencies: Mastery at the intersection of people and business. Alexandria, VA: Society for Human Resource Management.

2

3

The survey instrument is available upon request by contacting the SHRM Survey Program at [email protected] or by phone at 703-535-6301. Society for Human Resource Management. (2008). The varying roles of HR: A look at HR by organization staff size. Retrieved from www.shrm.org/surveys RBL Group, University of Michigan Ross School of Business, SHRM, IAE School of Business, IMI, Tsinghua University, AHRI & the National HRD Network. (2007). 2007 human resource competency study. United States: Authors. These data are not depicted in a table or figure. These data are not depicted in a table or figure. Society for Human Resource Management. (2007). 2007 job satisfaction: A survey report by SHRM. Alexandria, VA: Society for Human Resource Management. Society for Human Resource Management. (2005). The SHRM Symposium on the Future of Strategic HR. Alexandria, VA: Society for Human Resource Management. Fegley, S. (2006). SHRM 2006 succession planning survey report. Alexandria, VA: Society for Human Resource Management. Lockwood, N. R. (2006). Leadership development: Optimizing human capital for business success. SHRM Research Quarterly: 4. Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008). HR competencies: Mastery at the intersection of people and business. Alexandria, VA: Society for Human Resource Management. Ibid.

4

5

6 7 8

9

10

11

12

13

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14

Fegley, S. (2006). SHRM 2006 succession planning survey report. Alexandria, VA: Society for Human Resource Management. Benedict, A. (2007). SHRM 2007 change management survey report. Alexandria, VA: Society for Human Resource Management.

15

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Recently Published SHRM Survey Products

Other SHRM Research resources on HR’s role within organizations: The Look and Feel of Strategic HR—Conversations With Senior HR Executives (24 pages, December 2006) 2006 Strategic HR Management Survey Report (39 pages, October 2006) www.shrm.org/research BENEfITS 1. FMLA and Its Impact on Organizations Survey Report (48 pages, July 2007) 2. 2007 Benefits Survey Report (92 pages, June 2007) 3. SHRM Survey Brief: Backup Care (3 pages, May 2007) 4. SHRM Survey Brief: FMLA (4 pages, May 2007) 5. 2006 Workplace Vacation Poll Findings (37 pages, September 2006) 6. 2006 Benefits Survey Report (86 pages, June 2006) COmPENSaTION 1. 2006 HR Practices in Executive-Level Compensation Survey Report (39 pages, May 2006) DIvErSITY 1. 2007 State of the Workplace Diversity Management Survey Report (80 pages, February 2008) 2. 2006 Workplace Diversity and Changes to the EEO-1 Process Survey Report (44 pages, October 2006) EmPLOYEE RELaTIONS 1. 2006 U.S. Job Retention Poll Findings (47 pages, December 2006) 2. Job Satisfaction Series: 2006 Job Satisfaction Survey Report (68 pages, June 2006)

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HEaLTH/SafETY/SEcUrITY 1. 2006 Weapons in the Workplace Survey Report (37 pages, November 2006) INTErNaTIONaL 1. 2006–2007 Employee Retention in China Survey Report (36 pages, October 2007) 2. 2007 Corporate Social Responsibility Pilot Study (56 pages, April 2007) MaNaGEmENT PracTIcES 1. 2008 Managing Your HR Career Survey Report (80 pages, February 2008) 2. SHRM Survey Brief: Green Workplace (6 pages, January 2008) 3. SHRM Human Capital Benchmarking Study: 2007 Executive Summary (55 pages, June 2007) 4. 2007 Change Management Survey Report (52 pages, April 2007) 5. The Look and Feel of Strategic HR—Conversations With Senior HR Executives (24 pages, December 2006) 6. 2006 Strategic HR Management Survey Report (39 pages, October 2006) 7. Manufacturing Industry Findings on Human Resource Topics (57 pages, August 2006) 8. 2006 Succession Planning Survey Report (46 pages, June 2006) SELEcTION aNd PLacEmENT 1. SHRM and CCHRA 2008 Global Talent Sourcing in the United States and Canada (53 pages, March 2008) 2. 2007 Advances in E-Recruiting: Leveraging the .Jobs Domain Survey Report (44 pages, June 2007) 3. 2007 Job Satisfaction Survey Report (76 pages, June 2007) 4. Finding and Keeping the Right Talent: A Strategic View (7 pages, November 2006) 5. Are They Really Ready to Work Survey Report (64 pages, October 2006)

To access these reports and for a complete listing of all SHRM survey products, please visit www.shrm.org/surveys.

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SHRM members can download this survey report and many others free of charge at www.shrm.org/surveys. If you are not a SHRM member and would like to become one, please visit www.shrm.org/application.

HR’s Evolving Role in Organizations and Its Impact on Business Strategy Price: $79.95 Members/ $99.95 Nonmembers 62.37000

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