Über die Autorin bzw. den Autor

Edward E. Lawler III is the Director for the Center for Effective Organizations and a Distinguished Professor of Business at the Marshall School of Business, University of Southern California. He is the author or co-author of over 300 articles and 30 books. Susan A. Mohrman is senior research scientist at the Center for Effective Organizations at the Marshall School of Business, University of Southern California.

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Creating a Strategic Human Resources Organization

Stanford University Press

Contents

Tables and Figures..........................................viiPreface.....................................................xiThe Authors.................................................xiiiIntroduction................................................1The Study and Sample........................................121 Role of HR................................................212 HR Organizational Approaches..............................273 HR Activities.............................................324 Talent Strategies.........................................365 Shared Services...........................................446 Outsourcing...............................................497 Use of IT.................................................558 eHR Systems...............................................649 Effectiveness of eHR Systems..............................6910 HR Skills................................................7711 Effectiveness of the HR Organization.....................8412 Determinants of HR Effectiveness.........................8913 HR as a Strategic Partner................................100Conclusion..................................................105Future Directions...........................................114References..................................................120Appendix....................................................125

Chapter One

Role of HR

Respondents were asked to estimate the percentage of time that the HR function currently spends carrying out a number of roles versus how much time it spent five to seven years ago. Table 1.1 shows that our respondents report a significant change. According to them, the HR staff is spending less time on record keeping and auditing functions and more time on developing new systems and practices and on being a strategic business partner. We found no significant change in providing services (helping with the implementation and administration of HR practices). Overall, our respondents report significant movement toward HR becoming a strategic partner and doing higher value-added activities. However, before we conclude that this has actually occurred, let's look at the results from 1995 and 1998.

The data from 1995 and 1998 are almost identical to the data we collected in 2001 for the same question (see Tables 1.2 and 1.3). This finding makes two interesting points. First, it means that between 1995 and 2001 there has not been much change in how HR executives see the HR function spending its time. Second, it raises serious questions about the validity of our respondents' reports about how things were five to seven years earlier. One might expect that the 2001 estimates of how things were five to seven years earlier would be somewhat in line with how respondents said things were in our 1995 study, but they are not. Instead, the 1995 results are the same as the results for 2001! This finding suggests that the HR executives who responded in 2001, as well as those who responded in 1995 and 1998, may have perceived more change in their role than has actually taken place.

What should we believe, retrospective reports of the way things were or data from the past about the way things were? The answer is obvious: individuals are much better at reporting how things are now than they are at reporting on how things were years ago. In short, they probably are guilty of a bit of wishful thinking when they compare their present situation to the past, because they want to see themselves as being more of a strategic partner now than they were in the recent past.

We found the same time allocation results for companies of all structures: single integrated businesses, multiple related businesses, and groups or sectors of businesses. We also found no relationship between organization size and time allocation. This is a bit surprising; we expected that strategic business partnering might be higher in companies that have multiple businesses because they often face complex HR issues involving how the corporate staff and business units relate to each other.

The results concerning the relationship of strategic focuses and change initiatives to the HR role are shown in Table 1.4. Business strategies focusing on quality and speed are negatively related to providing services and positively related to strategic business partnering. This result is not surprising because achieving quality and speed requires supportive HR systems and strategies and a focus on nontraditional HR issues such as work and organization design. We might expect that knowledge strategies would be related to strategic business partnering, but this relationship does not quite reach statistical significance.

The results concerning the relationship between the change initiatives and the HR role show three significant relationships. As we might expect, the more an organization tries to build competency and knowledge management capabilities, the more focus the HR organization has on business partnering. Spending time on providing services shows a negative relationship to employee competency and knowledge management, indicating that when knowledge management is the focus, HR spends less time on services and more time on business partnering. This follows directly from the fact that effective competency and knowledge management are dependent on successfully positioning an organization's human resources relative to its business strategy. Hence, it also follows that the HR organization would be more involved in business partnering when an organization is particularly focused on building its knowledge and intellectual capital.

The involvement of the HR function in business strategy can take a variety of forms. Table 1.5 shows that in 2001 virtually all HR functions report that they are involved in business strategy. When compared to 1998, an increase exists in the percentage of people who report that HR is involved as a full partner, but the difference is not statistically significant. Thus, the data suggest but do not establish that the HR function is becoming more of a strategic partner.

Involvement in strategy is highest in corporations that are in several sectors. One possible explanation is that, in several-sector business organizations, HR is in a position to add value by influencing strategy at both the corporate and sector levels. Large companies are more likely to have an HR function that is a business partner. This result is not surprising given that the HR issues in large companies are often more complex, and the HR function is more likely to be staffed with individuals who have a great deal of experience.

Table 1.6 shows the relationship between the strategic focus of organizations and the role HR plays in strategy. The results show a very consistent pattern. Regardless of whether growth, focus on the core business, quality and speed, or knowledge and information is the area of focus, more focus on strategy seems to exist when HR is a full partner rather than a minor one. This is particularly true with both the focus on quality and speed and the focus on knowledge and information. Thus, HR is particularly likely to be a strategic partner when the business strategy focus is one in which HR systems are critical.

Table 1.7 shows the relationship between change initiatives and the HR role in strategy. HR is more likely to be a full business partner in developing strategy when organizations have a greater focus on initiatives that develop organizational performance and focus on competency and knowledge management. On the other hand, we found no relationship between the role of HR and the degree to which restructuring is a major change initiative.

Clearly, when HR has no role, restructuring is more likely to be an important initiative than are performance capability and knowledge management (3.7 versus 2.1 and 1.9). This raises an interesting question: Does HR influence the direction of the change initiatives, or do the change initiatives change HR's role? It may be that when HR has no role in planning strategy, organizations are more likely to focus on restructuring because HR does not acquaint them with the alternatives. Or it may be that when organizations focus on restructuring, they do not include HR in planning strategy because they feel that HR has little to contribute in this area. We tend to think the latter is the more common reason, but both probably do occur.

Overall, our data suggest that HR still has a considerable way to go in adding value as a business partner. It still spends a great deal of time on nonstrategic activities, just as it did in 1995. Even the numbers in Table 1.5, which show that over 40 percent of HR organizations play an important role in strategy, may be somewhat of an overestimation of the degree to which this occurs. The present study did not gather data from line managers to see how they would describe the role of HR in business strategy, but another study did ask both HR executives and line managers about how they see the role of HR (SHRM, 1998). It found a significant difference between HR executives' and line managers' estimates of the role they play in business. Not surprisingly, HR executives saw themselves playing more of a business-partner role than did line executives: 79 percent of the HR managers said they are business partners, whereas only 53 percent of the line managers shared this view.

Chapter Two

HR Organizational Approaches

The survey asked questions concerning the extent to which HR functions employ fifteen organizational and operational approaches. We chose these approaches for the study because they may facilitate HR being more of a business partner and in some cases a strategic partner. Statistical analysis divided the fifteen approaches into five groups. The groups and the mean responses to the items are shown in Table 2.1.

The practices used the least are self-funding of HR services and employee rotation into and out of HR. The lack of rotation is a major problem for the HR function. Without it, the HR staff are likely to remain a separate group that is not involved in or deeply knowledgeable about the business.

The practices used the most are those concerned with decentralization and service teams. Particularly popular is having decentralized generalists who support a business unit. This is a clear way to help HR become a business partner.

The moderate level of focus on resource efficiency is not surprising, given the financial challenges that most organizations faced in 2001. If anything, it is surprising that the focus on costs is not greater. Resource efficiency approaches include shared services, the transfer of tasks to line managers, self-service approaches, and self-funding requirements for HR services.

A comparison between the 1995 and 1998 results shows a significant increase in the use of three approaches: HR service teams, centers of excellence, and decentralized generalists. These same approaches show significant difference when we compare the 1995 and the 2001 results. Interestingly, the most frequently used approach, decentralized generalists, is also a practice that shows a significant increase. Clearly, companies want HR to be close to the business and act as a business partner, both at the corporate level and in individual business units.

The use of corporate centers of excellence is also increasing. This approach complements the use of decentralized generalists by giving them a source of expert help. Growth in the use of HR service teams is consistent with findings from other studies showing that teams grew in popularity during the 1990s (Lawler, Mohrman, and Benson, 2001).

Finally, the degree to which practices vary across business units has decreased. This may reflect efforts to simplify and achieve leverage in some HR activities and the tendency for companies to be in fewer diverse businesses. Corporations gain economies of scale when they use the same HR practices in all their units. As we will discuss later, this is particularly true in the case of transactions and the creation of IT-based self-service HR activities.

The relationship between companies' organizational structure and the organization of HR is shown in Table 2.2. Not surprisingly, single integrated businesses are less likely to deploy HR resources to the business units than are the rest of the organizations in the sample. This finding fits directly with the view that multiple-business corporations need to have some variation in their HR policies by type of business and that there are fewer synergies in multiple-business corporations to support a centralized HR function. This interpretation is supported by the finding that HR practices are much less likely to vary across business units in a single integrated business than they are in the rest of the organizations in the sample.

Large companies do differ from small ones. Large companies are more likely to have small corporate staffs, use decentralized HR generalists, rotate people within the HR function, have self-funding, and have transactions done on a self-service basis. Not surprisingly, size has an impact on how HR is organized because size makes it possible for companies to capture economies of scale by having service centers, fund the development of advanced computer-based HR information systems (HRIS), and assign generalists to sectors of the company.

Table 2.3 shows how HR organizational approaches relate to strategic focus. One focus shows particularly strong results. When companies focus on growth, then decentralization, resource efficiency, HR service teams, and rotation all are more common. Rapidly growing organizations are under pressure to grow and develop their HR function. Decentralization, teams, and the development of individuals through rotation are all ways to add strategic and operational capability to the HR function. Resource-efficiency approaches may be required to prevent the HR function from being overwhelmed by the transactions that are required to staff and service a growing organization.

The use of HR service teams is significantly related to all of the strategic focuses; the relationship is particularly strong with knowledge- and information-based strategies. The most likely reason for this is that strategy implementation often requires the development of cross-functional organizational and individual capabilities and the introduction of new organizational designs. Teams are one way to assemble the diversity of knowledge and skills required to address the complex HR issues that result.

Table 2.3 also shows the relationship between change initiatives and the organization of HR. A number of strong relationships are apparent. The use of outsourcing is related to all three change initiatives. This suggests that when an organization seriously addresses issues such as performance, restructuring, and knowledge management, it may free up HR resources by outsourcing, shedding transactional tasks, and securing external expertise to complement internal HR talent in order to implement these initiatives. Outsourcing also can be a way to reduce costs and improve service quality.

The use of HR service teams is significantly related to the organizational performance and competency and knowledge management initiatives. One likely reason for this is that HR service teams can bring together the multiple functions required to focus on performance improvement. At the same time, a team approach can improve competency and knowledge management in HR and in the rest of the organization.

Decentralization in HR is strongly related to restructuring. One possible reason for this is clear. When organizations restructure into multiple business units and complex business partnerships and networks, decentralization of HR is a way to establish a business partner relationship. It places the HR function close to its customers.

Resource-efficiency is significantly related to all three change initiatives. This suggests that whenever an organization considers change, a major issue is how to improve the efficiency of the HR organization. This is hardly surprising given the history of organizations being concerned about the cost of HR as a function and its administrative efficiency.

Rotation into and out of the HR function is significantly related to all three change initiatives. Focusing on major change initiatives may make it obvious to organizations that they can gain a considerable amount from having broader knowledge of HR in the organization and having individuals in HR who have a better understanding of the business. Rotation is one way to add to the knowledge and skills of HR professionals.

Overall, the results show relatively little change in the application of various organizational approaches from 1995 to 2001. We expected to see more adoption of practices such as joint line-HR development of HR systems, rotation, outsourcing, and centralized processing. These are all approaches that we believe can facilitate HR becoming more of a strategic partner, yet their use is not significantly increasing.

(Continues...)

Excerpted from Creating a Strategic Human Resources Organizationby Edward E. Lawler III Susan Albers Mohrman Alice Yee Mark Beth Neilson Nora Osganian Copyright © 2003 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission.
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