Strategic HR: Strive for Transformation Not Transaction

Strategic HR: Strive for Transformation Not Transaction

Emily Smykal

HR processes often feel transactional. And in an era of advanced technology and rapidly shifting candidate expectations, an HR strategy that doesn’t transform to match these changes risks falling behind. Simply punching in and punching out, checking off steps on a list, isn’t enough these days to elevate HR to the status of a strategic business function.

Many HR professionals are worried about how this affects them not just now, but also going forward. The best, most strategic HR teams get ahead of the curve, and stay ahead. Foreseeing talent shortages, keeping in sync with industry data, and demonstrating their importance to the C-suite. In a word, they’re transformational.

So what specifically is holding HR back from functioning in a transformational way? A recent survey by the Society for Human Resource Management (SHRM) of HR professionals sheds some light. Turns out issues spanning the range of strategic HR activities, from sourcing talent to navigating legal requirements, are all cause for concern. But that doesn’t mean your HR team should shy away from a more transformational approach.

What’s In the Way of More Strategic HR Approaches?

The SHRM survey asked, “What are your organization’s greatest challenges involving the HR function?” HR professionals rated topics based on their difficulty now, and the expected difficulty in the next decade. By far the most common concern now is executing HR processes smoothly and efficiently under constrained resources (69%).

But this was followed by moving HR from a transactional to transformational role within the organization (44%), and the growing complexity of legal compliance (41%). Tight budgets, overcoming the traditional role of HR internally, and the ever-present legal issues in HR are undoubtedly ever present in the mind of a human resource professional. But respondents also expressed concern about creating an effective HR infrastructure that supports an employee-centric, service-oriented strategic HR organization, especially in the next ten years (38%).

Two other issues that didn’t rank as high in the short term did attract concern for HR in the near future: aligning HR technology practices to organizational management strategy (36% agreed over the next decade) and attracting highly competent HR professionals that fit with the organization’s HR strategy (33%).

strategic hr challenges 2016Source: SHRM, 2015, Human Capital Challenges

The survey also found some interesting differences between small and large firms. Among HR professionals at big companies (25,000+ employees), 67% agreed shifting from transactional to transformational is one of their greatest challenges. But just 32% of their peers at small organizations (1-99 employees) agreed. It may be that demonstrating strategic value is easier within a much smaller firm, so transformation doesn’t seem like such a hurdle. Or there may simply be different expectations of HR within different sized firms.

What Does It Take to Transform?

SHRM also asked respondents, “What key factors determine your organization’s ability to successfully meet HR-related challenges?” You can think of their answers as some of the best ways to shift from transactional HR processes to transformational ones.

When it came to factors that help meet these challenges now, the top choices were: strong support for the HR function from senior leadership (33%), the efficient use of HR information systems/technology (29%), and a greater investment in employee skills/development through training and education (28%).

But some other elements were considered more helpful when facing challenges over the longer term. 31% of HR professionals ranked strong and effective organizational leadership as the best way to meet HR-related challenges in the next ten years. Other tools HR relies on to deal with difficulties include strong and effective HR leadership, strategic HR practices that align with organizational goals, and strong HR competencies among HR staff.

strategic-hr-obstacles-in-2016Source: SHRM, 2015, Human Capital Challenges

Why You Should Want to Transform

Does it really matter if your own company’s HR strategy is transactional versus transformational? As we said, the most effective HR departments stay ahead of the curve. And this is pretty hard to do if you’re operating the same way you did five or ten years ago. All aspects of HR, from recruitment and onboarding to compliance and benefits, have been impacted by changing technology and a changing workforce.

So thinking of HR as a transformational, and strategic, component of your organization may be the best way to keep up with those changes. It’s not all that different from comparisons between proactive and reactive recruitment methods. You can either sit back and maintain the processes you already have in place, accepting the results they deliver. Or you can make the effort to identify areas for improvement, technology that needs upgrades, and invest resources to optimize every part of your HR strategy.

By maintaining the transactional status quo, HR professionals risk missing out on top talent, and neglecting employee happiness in well being. They also might miss the huge opportunity to demonstrate to executives just how important their work can be to the entire business. HR needs to be approached from a holistic point of view, encompassing every function of human capital management. And what better way to do so than by transforming HR into a cross-functional, forward thinking team?

Interested in revving up the recruiting engine and driving performance forward? Check out our recent eBook, “How to Rapidly Improve Your Quality of Hire.”

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