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Next-Generation HR Functions: 2014 HR Year in Review

2014 was a transformative year for Human Resources – the recent shifts made in how we attract, develop, manage, and retain critical talent segments will impact surely how we operate in 2015, as well as the strategies and goals we set for the next several years to come.

Next-Generation HR Functions: 2014 HR Year in ReviewWe’re blogging on the four top insights/takeaways for HR executives from 2014, and examining solutions and emerging trends in these critical terrain areas.

This third blog in our series serves as a briefing on our research “Unlocking HR Business Partner Performance in the New Work Environment”. Members of CEB Corporate Leadership Council can access the full study on their member website.

The Influence of the HR Business Partner Has Been Elevated, and So Has the Complexity of Their Role

An organization is only as good as its people. So it’s no surprise that CEOs rank human capital as their number one focus—higher than operational excellence, innovation, and customer relationships.

Yet C-level executives also cite a number of pains their organizations have experienced in the previous 18 months as a result of inadequacies in human capital management.

    • Though three out of four chief human resources officers expect their HR business partners (HRBPs) to be strategic partners to the line, less than one-fifth of line leaders say that’s happening.

    • Talent mismanagement has led to misses on key financial targets (among 43% of C-level executives); misses on growth targets (39%); declines in innovation (40%); and declines in overall competitiveness (27%).

    • And though 74% of organizations are effective at setting strategic objectives, only 10% are effective in aligning talent to meet those objectives.

Organizations have made investments to help HR Business Partners be better strategic partners, and indeed the relationship between HR and the business has improved, with more than half of line leaders saying they have a great relationship with their HRBP (up from 43% in 2007).

So what’s causing line leader dissatisfaction? Our research points to two significant shifts in the work environment as contributing factors:

    1. Greater dependence on others. Seventy-six percent of HRBPs have to collaborate more with others than in the past.

    2. A flood of new data sources. Three quarters of HRBPs report that they have access to more data and information in the past, which can lead to more informed decisions but also to information overload.

It’s Not Just About the Individual

Organizations have invested in developing HRBP competencies, but individual attributes are only half the picture. Four organizational barriers inhibit the strategic effectiveness of even the most capable HRBPs:

    1. Application Barrier – Lack of clarity into how to apply competencies in day-to-day work

    2. Partnership Barrier – Being tasked to provide transactional support rather than strategic insight

    3. Functional Barrier – Tensions among functional groups that inhibit collaboration within HR

    4. Enterprise Barrier – Lack of coordination with functional partners outside of HR

Organizations that improve HRBP competencies and minimize or remove these organizational barriers can nearly double the number of HRBPs who are effective at strategic activities—from 19% today to 40% by 2017.

For an average Fortune 500 company, such an improvement translates to an additional $700 million in revenue and $60 million in profit.

Furthermore, when organizational barriers come down and HRBPs become more strategic, they can improve employee performance by up to 22%, employee retention by up to 24%, revenue by up to 7%, and profit by up to 9%.

Proven Tactics for Removing Barriers to HRBP Performance

  • Focus the HRBP role on strategic activities that identify and solve talent challenges in alignment with business unit and corporate objectives.

  • Prepare and hire HRBPs for the critical competencies that are necessary in the new work environment, such as data judgment and leveraging professional networks.

  • Do not rely exclusively on capability building alone to improve HRBPs; remove organizational barriers that prevent them from being more strategic.

  • Drive consistent standards for HRBPs across the organization by setting rigorous expectations for what it means to be strategic and how it applies to day-to-day work.

  • Reframe line leader expectations by equipping HRBPs with the data and analytics to evolve from transactional support to delivering strategic insights.

  • Instead of trying to minimize tensions among HR functions, view them as opportunities to negotiate roles and find new ways to coordinate.

  • Beyond information sharing, formalize a process for fostering collaboration with non-HR peers to deliver integrated solutions to the line.

Check back in two weeks to read the final blog in our series, which will cover Productive Learning Cultures.

And look back at blogs that have already published in the series: click here for “The Performance Transformation: Strategies to Build a Workforce of Enterprise Contributors”, and click here for “Branding for Influence: Moving from Appeal to Influence”.

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