The human resources (HR) department has existed since the First World War though under different names like Personnel Administration, Industrial Relations, Labour Relations and so on. They denoted the different areas that required special focus which were all related to workers. As it stands today, HR definitely has evolved with the changing social and business needs of the organisation. All the transactional activities like succession planning, employee compensation, recruitment etc., are accomplished smoothly. It’s these transactional activities that the HR is usually associated with. However, their deep potential of becoming a business partner is largely ignored by many organisations today, in fact we can say that HR hasn’t been given any better position than for fulfilling the routine processes. It’s been side marginalised by the top management easily.
What is Transformational HR?
The HR department being a crucial link for managing the employee-employer relations, it actually has a much greater role to play in businesses today. HR must develop from just carrying out the transactional activities, to becoming a strategic partner in the organisation. To develop into an ‘Internal Consulting Organisation’ is important for HR to maintain its relevance. Transformational HR means becoming a change agent in the organisation. HR must focus on measurable business outcomes through innovative employee engagement activities and help businesses to earn measurable increase in revenues and profits.
Being a strategic business partner calls for a shift in focus to the customers, market growth and the entire stakeholders of the company. Understanding the company well and its culture can help the HR department to formulate effective strategies for helping the organisation meet its goals. At a time when companies are embracing newer opportunities for growth, it is highly important for the HR department to become more creative in its ways and methodologies for equipping the employees with the right set of skills. It needs to push its boundaries to bring in greater employee engagement which is necessary to retain precious talent in the organisation. HR must not just be reactionary in nature, but should be able to anticipate changes in the business and propose solutions for meeting the changing challenges of business concerns.
This kind of an approach will make HR practices more relevant and move it to a position of an Internal Consultant Organisation. The modern organisations today are embracing this transformational role of HR. For example, the retail giant Future Group is revamping its HR strategy to meet the changing expectations of the ‘customer’s mindsets and behaviour’. It plans to integrate the online and offline retail models so as to make buying more convenient at a time when e-commerce companies are flourishing, and it faces immense competition in this field. It plans to hire from top IITs for carrying forward the new strategy by training and developing them once inducted. HR programmes that graduates undergo, however do not talk much about this transformational practice. The much needed skills for this change is also lacking among newcomers. While the skills required for the smooth accomplishment of the transactional activities can be developed, an initiative has to be made to push HR to becoming a guide to the company, including advising it on the feasibility of new projects.
Nevertheless, the transactional part of the job cannot be undermined since it does help the organisation in reducing costs and keep them up to standard with the statutory compliances of business. According to a report in the Hackett Group on Best Practices in HR (2004), companies that followed world class HR, showed that they spent 27% less on employees annually, 31% less on total labour, had 35% fewer staff per thousand employees, and 61% experienced fewer voluntary turnover. Integrating the performance management techniques with what the company requires, rather than imitating the best practices followed is crucial in building credibility for HR. An effective communication system, good interpersonal skills, and commitment in meeting the goals will prove important for putting HR in the front row. The transactionary activities can be outsourced, while the more value adding internal consultant role should be internally sourced. The human resources departments have to move towards becoming trusted advisors internally, with realistic solutions for changing social and business environments.
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Amrita Nair
The writer is currently pursuing a Post Graduate Diploma in Human Resource Management from Symbiosis, Pune. She loves writing articles on her subjects Economics and HR.[/column]