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HR Function identity and crisis

From the Archive

News created: 05 Mar 2010

Some companies are turning their backs on so-called ‘touchy-feely’ human resources initiatives such as cultural change programs. Instead they are focusing on performance measurement processes and increasing technical skills through targeted development as a means to reduce cost and ensuring greater value from staff. A new metrics-driven agenda has been created in many organisations.

In this new environment employees must ‘prove their value to the company’ in ways that can be measured. This approach has been termed a ‘rebalance’ from focusing on employee behaviour to how such behavior directly translates into workplace and organisational performance.

The greater influence of the chief financial officer and increased global competition has driven increased accountability and value-led approaches. These pressures have forced the human resource management function to undergo a radical transformation by justifying its role and existence.

Human resource management is transforming itself in three major ways - leadership and culture; development and training; and performance and rewards. This is more than a change of terminology, this is a fundamental change to the expectations and the responsibilities of HR managers and the role of the HR function.

Some organisations and managers have traditionally considered the human resource management department as lower status function in the management hierarchy. This is due to a perception of HR’s lack of understanding of the business, or more specifically “the numbers”.

This perception was partly due to a lack of clear financial outcomes and value to the business and partly because human resources and related functions often serve an administrative paper shuffling role, rather than a business driven strategic agenda.

Given this context, a relatively under-developed area in HR research both in theory development and empirical data has been the relationship between the HR function and line management and the value added that the human resource function can contribute to line management performance.  The role of line managers has always been central to the concept of HRM. The assignment and devolution of HR responsibilities to line management is often claimed to be one of the defining characteristics of HR.  However, the roles of the HR manager and line managers as part of the HR function role are often not clearly thought through. Is sharing such responsibilities a way for HRM specialists to be taken more seriously or does it run the risk of HR specialists losing control over both the process and the outcomes in ways that inhibit, rather than help the firm. In essence, what are the costs, benefits, challenges, issues, and strategies for HR and line managers to partner in the design and delivery of human resource management policies and practices?

A large-scale research project I have undertaken with Professor Steve Frenkel from UNSW in leading Australian organisations over the last five years shed some light on this question. The AHRI and Australian Research Council sponsored project ‘Human Resource Managers’ Contribution to Workplace Performance’ involved 144 interviews with line managers and HR managers from ten organisations. In addition, a survey of nearly 1500 employees was carried out departments covered by the interviews, which was designed to assess employee perceptions and evaluations of management and HR practices in their organisation.

The organisations in the study were selected on the basis of their reputation for establishing high performance work systems and advanced human resources policies. The firms covered a wide range of work and organisational complexity (eg investment banking to core call centre customer service work) across key industries (eg manufacturing, hospitality, banking, insurance, professional services, telecommunications and alcoholic beverages)

What this research suggests is that increasing global competitiveness has highlighted the influence of the 'market' in dictating the nature, type and purpose of the employment relationship. HR function providing the balance between behaviors and business performance has increased the profile for HR in organisations in providing value by measuring and evaluating people management practices and performance while also providing the tools for line managers in changing employee behaviors at work while also making sure not to lose this value by focusing on employee retention and reducing turnover.

Overall for the HR function this research suggest while the HR function has changed instead of HR playing a diminishing role in organisational decision making, the HR may in fact provide brining to acquire the influence it has always wanted in providing the balance between behaviors and performance. While the research focus on organisations with advanced high performance workplace systems and advanced HR practices it nevertheless provides hope that at long least the HR manager has something to be proud off, and our research suggest they are proud of what they do for employees and the organisations

The compliance mentally that drove the systems and institutions of work are now considered by many as outdated and part of past vested interest. This has highlighted the importance of institutions, processes and procedures in changing with the times to capture the future.

The use of sophisticated employee development and training programs to give workers not only opportunities with their employer but in the future provide the necessary security in the brave new market driven world. Even with the Rudd’s Fair Work Act now in reality trade unions ability to ensure secure employment for workers has been undermined.

Finally, for many employers the use of performance management system and through performance indicators and objectives link to wages and rewards.  ‘Softer’ HR strategies would seem to be replaced by great focus on performance and technical skills. The capacity of HR Managers and the HR function as a whole is under the spot light. Our research shows the challenge for HR is to step-up to the mark and not only embrace but full integrate this new world of work.

For HR managers, there are challenges, but the opportunities are there.

Well, it will be for some who recognise it.

Dr Paul J. Gollan FAHRI is an Associate Professor and Director of Research in the Department of Business at Macquarie University. He is also an Associate Fellow in the Department of Management at the London School of Economics and was a Chief Investigator on the ‘Human Resource Managers Contribution to Workplace Performance’ AHRI/ARC Linkage Research Project.

Paul Gollan will be presenting at LSE's HR Week 2010 conference at the London School of Economics.

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