Contributors

Examining HRO and HR Metrics…Beyond Simple Benchmarking

Redefining the role of the HR department by considering a new world focused on strategic and not transactional services.

by Scott Golas

Any modern writing on HR includes some commentary on the prevalence and velocity of HRO. When writing about HRO and metrics, the temptation would be to list the myriad functional areas and associated measures and service levels. Instead, let’s look at the importance of HR measurement in the broader scope of HR service delivery, for which outsourcing plays a prominent role.

As data supporting the link between human capital and shareholder value has mounted, HR professionals have sought to use this as an entry point into their organizations’ leadership teams. But just because prominent HR talking heads espouse that HR deserves a seat at the table doesn’t make it so. In spite of the data on their side, HR professionals have a poor track record in meeting stakeholders’ expectations. No matter how illustrious the strategic thinking, unless the basic needs of their organizations are met, HR professionals will not be viewed as competent team members.

The end game has been to improve HR’s recognition as strategically important at the C-level and to become “business partners.” In response, HR’s strategy to date has been to minimize the traditional role of administrative and resource-intensive processor via outsourcing in favor of increased attention to a business advisor role. Each of us has been inundated with the HR “pyramids.” To date, the HR community has mostly been able to talk about what must be done. The ability to execute such a transformation has been infrequent and slower than what executives, shareholders, and employees would have liked.

The main problem is that HR has not explained to its clients the true importance of its mandate. Conventional thinking about HR reflects the paradox facing line managers. If people are the most important asset, why is HR often thought of as an administrative overhead?

For the most part, this perspective has been justified by the role that HR has played in the past, emphasizing administrative efficiency and compliance. The narrow-minded view of “climbing up the pyramid of value” strategy attends to the desire of HR professionals to work on something significant within their organizations, but it fails to address the critical need that companies have to improve the effectiveness of their workforce—a need that HR is uniquely qualified to address.

Though HR owns most people-related functions, it is rarely true that HR is given real responsibility for the effectiveness of the company’s people. HR typically has responsibility for people governance but rarely for results of the workforce. HR is almost never an active driver in creating or improving the effectiveness of people’s actual work. Instead, it fulfills the role of passive provider of an infrastructure for the business to source, select, reward, and deploy its workforce.

To be competitive, most executives are desperately in need of better practices and tools to make their workforces more effective, yet organizational leaders separate HR functions and waste the abundance of data and skills within HR by assigning it the low-priority task of administering policies and procedures. Look over the shoulder of most workers, and observe the percentage of work affected by the services that HR provides. To optimize that worker’s performance requires appropriate training, rewards, and organizational structures—all of which HR has compelling data to inform and most of which it has the skills to address.

That said, HR is the only function within a company that is reasonably positioned to improve the way people work. HR owns and manages all of the data about workers and work. HR as a discipline—not the department—has a matchless understanding of the factors that govern worker productivity: competencies, management processes, relationships, rewards, collaboration, learning, job structures, partnership models, and more.

IT often inherits this role simply because technology is everywhere and is a key resource in getting work done. However, IT typically does not improve the efficiency and effectiveness of work processes, implement consistent policies, or deliver a work environment that takes full advantage of relevant knowledge, resources, and tools.

For HR to lead the development and implementation workforce strategies in support of organizational objectives, it must relinquish its transactional processing role. When combined with a strong HRO partner(s), HR can upgrade its service delivery and access to HR and workforce performance measures.

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