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Align the Role of HR with the Organization by Conducting a DiagnosticDon’t let an identity crisis thwart HR success.

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The business wants HR to become more strategic, yet HR has been challenged in accomplishing this goal. Conduct a diagnostic exercise on the current versus required roles of HR as a starting point to gain an accurate picture of where HR is, where it needs to go, and how to close the distance.

Introduction

HR leaders whose departments are stuck in an administrative rut and want to become more strategic.

HR leaders who want to better understand the role their department is currently playing in the organization compared to the role actually required of them.

HR leaders who want to better align their role and activities with the needs of the business.

HR leaders who want a platform for communicating with business leaders about their HR requirements.

Understand the appetite for – and benefits of – HR playing a more strategic role in the organization.

Recognize the opportunities and challenges on the path to HR becoming more strategic.

Leverage a model for understanding HR’s role based on behaviors, not functions.

Identify the current role HR plays in the organization and the role the business needs HR to play.

Analyze the gap between current and required roles in order to establish priorities for role transition.

This Research Is Designed For: This Research Will Help You:

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Executive Summary

• Business executives are realizing the importance of optimizing labor investment to reach strategic goals, and are demanding that HR play a more strategic role.

• HR must continue to perform day-to-day operational activities like recordkeeping and transactions – the historical focus of most HR departments. However, the business expects HR to do these things as a basic requirement of the HR job description. Administration is not viewed as a “value-add” that will drive the business forward and help it reach its goals.

• The smaller the gap between the role HR is currently playing and the role the business requires HR to play – that is, the greater the alignment between the roles – the higher the success of the HR department.

• Recent research by John W. Boudreau and Edward E. Lawler III shows that the typical HR department allocates its time the same way it did 15 years ago, despite HR leaders’ beliefs that they’ve become more strategic. Possible reasons for this lack of change include mistaking complexity for strategy; the relative novelty of the “HR as strategic partner” concept; and a range of cultural, awareness, and capability issues.

• HR leaders who have successfully transitioned HR into a strategic role cite the individual will of the HR professional as an essential ingredient. When it comes to being strategic, HR needs to create its own opportunities!

• McLean & Company created an HR Role Diagnostic Tool and a Behaviors Spectrum model to help diagnose HR’s current and required role. There are seven segments to this Spectrum: Information, Problem Management, Direction, Change, Policy, Performance Management, and Command.

• HR and business leaders perceive HR’s current role differently. HR leaders tends to rate their departments closer to strategic in terms of behavior, while business leaders rate them closer to administrative.

• HR and business leaders are in very close alignment when it comes to HR’s required role – strategic is the target.

• Closing the gap requires prioritization and a systematic effort over time. Priorities should be set on the basis of which segments of HR behavior will bring the biggest bang for the buck, and overall capacity and capability for change.

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This solution set is the first of three in a series on the role of HR in the organization

Align the Role of HR with the Organization

by Conducting a Diagnostic

Align the Role of HR with the Organization by Transitioning HR from Administrative to Functional

Align the Role of HR with the Organization by Transitioning HR from Functional to Strategic

1 2 3

Taken together, the information and advice in these three solution sets will help an organization’s HR department achieve alignment with business needs and goals.

Read this set first! Conducting a detailed diagnostic of the current and required roles of HR in the organization is an essential first step. Ensure that you’re headed in the right

direction before taking action.

If we can be nimble, if we can partner, and if we can demonstrate the ability to add value there's great opportunity. But I would say if you like to push paper, if you like things the old way, if you're not [a] change agent, it's not a good time to be in HR.

– Cindy Dunn, VP of HR, Heart and Stroke Foundation

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Every HR department demonstrates behaviors along the seven segments of a Behaviors Spectrum. Placement on the Spectrum helps determine if that HR department is – and should be – Administrative, Functional, or Strategic.

McLean & Company uses behaviors, not functions, to describe HR’s role – understand this model before reading any further

The following table shows a brief breakdown of the Behaviors Spectrum.

Each of the seven Spectrum segments will be described and discussed in more detail in this diagnostic solution set, as well as in the companion solution sets that provide recommendations for transitioning between roles.

Segment Description Behavioral Range

1. Information How HR collects, stores, analyzes, and acts on employee data. Receives vs. Applies

2. Problem Management

How HR responds to and resolves employee issues. Improvises vs. Standardizes

3. Direction How HR envisions and sets work goals and priorities over time. Today-oriented vs. Future-oriented

4. Change How HR approaches organizational transformation. Reacts vs. Creates

5. Policy How HR manages rules for HR processes and employee behavior. Corrects vs. Prevents

6. Performance Management

How HR affects employee efficiency and effectiveness. Appraises vs. Develops

7. Command How HR shapes the way management governs employees. Manages vs. Leads

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What’s in this Section: Sections:

Locate the HR Role Pain Point

Locate the HR Role Pain Point

Build Your HR Role Alignment Toolkit

Conduct an HR Role Diagnostic

Conclusion: Next Steps

Appendix

• Understand why business leaders want HR to become more strategic.

• Learn the impact on HR’s overall success when HR aligns its role to business needs.

• Identify external and internal barriers to HR becoming more strategic.

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HR’s “role” is essentially its job description: the operational and strategic responsibilities and requirements HR must meet, as set by the business.

HR departments must play the role required by the business in order to be valued – the alternative is painful gaps

When employees fail to fulfill their job descriptions, they receive poor performance appraisals and may be terminated.

When HR fails to fulfill its job description, the organization will perceive it as inadequate, unreliable, and an impediment to the organization’s ability to meet its goals.

When a gap exists between the role HR is playing and the role the business needs it to play, the responsibility for that gap and the pain it causes are shared by both HR and the business.

Pain Felt by HR and the Business:

x Waste: HR invests time and resources in the wrong initiatives.

x Low return on investment: HR initiatives are incomplete or don’t “stick.”

x Poor reputation: HR is seen as unhelpful and ineffective.

x Low credibility: HR’s recommendations are rejected or ignored.

x Low morale: HR staff are frustrated, disempowered, and disengaged.

x Failure: Business goals are not met!

Common Causes of an HR Role Gap:• Poor communication: Business has not communicated its

needs and goals, or HR has not sought out this information.

• No consensus: There is disagreement about priorities.

• Disproportionate growth: The business has grown faster than the HR function, and HR doesn’t currently have the skills, knowledge, or capacity to meet its commitments.

• Executive team attitude: The executive doesn’t value what HR can do for the business, believes it can do HR’s job better than HR, or thinks HR can’t meet its requirements.

• HR team attitude: Entrenched in old or rigid ways of doing things and isn’t willing to adapt or connect.

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Pain is mitigated, and HR success best achieved, when HR’s role is aligned with business needs

It really depends on what the business needs at the particular point in time.

That's how you earn the right to continue the conversation and that's how you

demonstrate value. Is turnover an issue? Is retention of staff an issue? Is

engagement? What is the burning issue?– Cindy Dunn, VP of HR, Heart and Stroke Foundation

The smaller the gap between the role HR is currently playing and the role the business requires HR to play –

that is, the greater the alignment – the higher the success of the HR department.

The success of the HR department was calculated by taking the average agreement to the following questions:

• Our HR department has the skills to successfully meet its current commitments

• Our HR department has sufficient time to successfully process its current workload

• Our HR department is taken seriously by business leadership

• Our HR department delivers on commitments while achieving high quality

• Our HR department feels valued, motivated, and empowered to do its work

Very Large

Very Large

Very Small

Overall Gap

Su

cces

s o

f H

R

Dep

artm

ent

Source: McLean & Company, N = 121

“It doesn’t take too many examples of HR demonstrating value before [the business] turns around and asks you for advice.”

– Martha McIver, VP Canada HR, CBRE Ltd.

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Business leaders are realizing the importance of optimizing labor investment to reach strategic goals, demanding that HR play a more strategic role.

The business wants HR to play a more strategic role: administration has its place, but the appetite for it is shrinking

Top 3 Priorities Identified by Business Executives

Develop HR Strategy 75%

Leadership 82%

Workforce Planning 84%

Source: McLean & Company; N = 133

Percentage Who Selected Each Area as a Top Priority

McLean & Company’s HR Trends 2012 Survey reveals that the top three HR priorities identified by the business are workforce planning, leadership, and developing an HR strategy.

These priorities are all strategic in nature in that they:

• Have long-term time horizons to achieve success.

• Are key tools in helping an organization successfully reach its business strategic goals.

• Have an impact on bottom-line business outcomes.

HR must continue to perform day-to-day operational activities like recordkeeping and transactions – the historical focus of most HR departments. However, the business expects HR to do these things as a basic requirement of the HR job description. They are not viewed as value-add activities that will drive the business forward and help it reach its goals.

The goal has been to create an organization that can deliver the necessary, daily (but low value-added) transactional work of HR consistently and efficiently while at the same time

undertaking complex consulting and project-based work that is intended to further strategic business initiatives.

– Amy Kates, Kates Kesler Organization Consulting

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Many HR departments are stuck in an administrative rut. Some HR leaders realize this, and others don’t. Regardless, confusion and frustration abound.

However, HR has not moved towards taking on the more strategic role desired by the business

A comprehensive academic study by John W. Boudreau and Edward E. Lawler III at the Center for Effective Organizations at the University of Southern California found that HR leaders believe they are spending increasingly more time on strategic activities than in the past.

HR leaders recall spending significantly less time on strategic partnership five years ago… and significantly more time on auditing and HR administration… Thus, the impression of HR leaders is that their HR function has evolved from administration to strategic partnership. Yet, the data on how they are currently spending their time suggests that they have not changed how they are spending their time. – Boudreau & Lawler

Strategic business partnership activities

Providing and developing HR

programs and services

Recordkeeping and auditing

25%

25%

50%

The rest of their data, however, goes on to tell a different story. In reality, how the typical HR department allocates its time has not changed in the past 15 years. Here’s the breakdown:

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The challenge of dealing with complexity may feel like being strategic, which could explain why HR leaders report increased strategic activity.

While HR practice has changed, it’s more likely HR leaders are experiencing increased complexity, not increased strategy

Factors that have increased HR complexity in the past 15 years include:

• Increasing legislative compliance demands.

• Growth in workforce mobility and globalization.

• Increased demographic diversity.

• Dramatic economic upheaval accompanied by severe labor cost-control measures.

An organization can respond to these complexities strategically or non-strategically.

However, complexity and strategy are not the same. Dealing with complexity versus behaving strategically involves different activities with completely different business outcomes.

Legislative compliance, e.g. new minimum wage

Globalization, e.g. opening branch offices in foreign countries

Demographic diversity, e.g. Baby Boomer retirement

Economic upheaval, e.g. decreased revenues

Strategic ResponseNon-Strategic Response

Meet minimum compliance requirements to avoid fines and lawsuits.

Exceed minimum requirements to increase engagement and build employer brand.

Implement formalized local recruiting programs.

Establish regional centers of excellence to reduce operating costs and improve quality of service.

Have Baby Boomer staff document processes and best practices.

Succession plan against a 5-10 year time frame while implementing a formal mentoring program to promote tacit knowledge transfer.

Conduct layoffs to reduce labor costs.

Implement temporary hours reduction program to cut costs, retain employees, and position for recovery.

Example

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McLean & Company Helps HR Professionals To:

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Empower management to apply HR best practices

Develop effective talent acquisition & retention strategies

Build a high performanceculture

Maintain a progressive set of HR policies & procedures

Demonstrate the business impact of HR

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