How is HR faring as a strategic business partner during the downturn? Mark Barlow reveals the results of a recently published report on this topic, which examined the efficiency and effectiveness of HR during these tough economic conditions.

The Role of HR in Turbulent Times is a newly published report from Qikker Solutions. Launched at the European HR Directors’ Business Summit in January, the report looks at the efficiency and effectiveness of HR during a downturn.

There is no doubt that we are facing unprecedented economic challenges and organisations have to respond and react quickly to ensure their survival and hopefully their prosperity. This research wanted to ascertain how HR is faring as a strategic business partner.

The research, which interviewed 122 UK-based senior HR professionals, showed that only 29% of organisations regularly use people metrics and measures when making operational business decisions, whilst 48% sometimes use this data and 22% of HR professionals say that their organisations never use people measures. This is despite over 83% of respondents stating that the setting and alignment behind clear organisational goals is of the highest importance.

Especially in times of change, organisations need to base their strategic direction on facts and figures. Marketing departments conduct thorough market research and testing before launching a new product. Finance departments generate the figures and forecasts to support business decisions.

People costs are such a significant operational expense that it is logical to expect organisations to have quality measures and metrics in place to underpin people-based decisions such as productivity, individual effectiveness, and an understanding of who the top performers are.

In the recent KPMG report The Trouble with HR, the CEO of a major high street retailer said: “When the marketing director comes to the executive board meetings he presents data on our consumers and we are given enormous insight about their buying habits, their aspirations, their concerns and their hopes. We have clear demographic data, and we can predict with real accuracy how patterns will evolve. But when HR presents information about our employees it is less precise, less concise, less insightful and less predictive.”

Decision-making measures

We asked HR practitioners what are the important measures that aided business decision making. The most important measurement is succession planning, with 42% saying this is a high priortity. This is closely followed by development needs (37%), goal alignment (32%) and employee engagement (32%). Yet, establishing talent profiles is only seen as important for 21%. This is a potential contradiction, given that talent profiles provide the greatest ability to objectively measure the depth of organisational capability and potential.

In our experience, we know that organisations rarely focus on ongoing performance management, instead only recording somewhat subjective measures. This is a rear-view mirror approach that produces annual historic data rather than actionable information gathered from continuous proactive performance management. The fact that our research shows that 60% of performance processes are typically paper-based might explain this. It is very difficult to identify, measure and analyse this information without a technology platform.

Through research this year and last year we have tracked the barriers to implementing HR technology. While there is strong support for implementing HR technology, the main barrier is still cost, 61% up from 48% last year. This was compounded to a lesser extent by concerns over the time required to affect such change.

Organisations are aware of the issues and the actions required to implement better HR processes and communications through technology. However, unsurprisingly, availability of time and money appear to prevent positive action. Organisations are preserving cash. HR is increasingly focused on restructuring related issues, as are line managers. IT is targeting core business system improvements. So, people-based systems continue to remain a traditional low priority.

At a time when good quality people information and strong communications is vital to short and long-term organisational health, and clearly recognised through the research, traditional barriers seem set to prevail. Does it need to be this way?

Historically, companies were required to buy, build and maintain their IT infrastructures despite exponential costs. Software as a Service (SaaS) gives companies an alternative. Now, they can plug in and subscribe to services built on shared infrastructure via the Internet. The SaaS model has flourished in recent years because of lower initial costs, rapid implementation, painless upgrades, seamless integration and high-user adoption.

It is difficult to maximise an organisation’s performance if people performance is not measured. Our research showed that there is an obvious disconnect between what HR is achieving for the organisation and the value placed on measurement by the business.

HR’s reaction to the downturn

Colleen Guy, senior partner at HR consultancy hershguy, commented in the report: “The economic downturn has had an impact on HR and they are in danger of losing their place at the top table. This is partly driven by the needs of the organisation that wants a personnel HR service where HR takes control of all personnel functions leaving managers to concentrate on the business. This means that HR is becoming reactive to business demands, rather than proactively adding value. The demands of the business are difficult for HR to counter and unless they have already made serious progress in playing a strategic role, they are likely to just become delivers of personnel services once again.”

HR metrics feed proactive decision-making, rapid response to problems and efficient use of training and developing budgets. Customer satisfaction will be higher and the HR department will enjoy improved morale and greater respect from the business.

Businesses must be able to change and adapt quickly to the shifting economic climate. It is madness if operational decisions are being made without taking into account the human element as strategies are delivered through people. When the economy is so turbulent, businesses need to be guaranteed that a new strategy has every chance to succeed. This is no time to be taking risks and making potentially business-damaging decisions.

Now, more than ever, HR has an opportunity to position itself as a valuable business partner. Through utilising people measures, an extra dimension of facts and figures can be added to further inform business-critical decisions, ensuring that organisations are best positioned for short and long-term success.

Mark Barlow is managing director at Qikker. The research, The Role of HR in Turbulent Times, can be downloaded free of charge by going to www.qikker.com