1. business and industrial
2. business operations
3. human resources

A Survey Report
by the Society for
Human Resource
Management
HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
Linking Critical HR Functions to Organizational Success
Project Team
Project leader:
Amanda Benedict, M.A., survey research specialist
Project contributors:
Nancy R. Lockwood, M.A., SPHR, GPHR, manager, HR Content Program
Evren Esen, manager, Survey Program
Steve Williams, Ph.D., SPHR, director, Research
External reviewers and contributors: SHRM Organizational Development Special Expertise Panel: Libby Anderson, M.S.,
SPHR, Fernán R. Cepero, PHR, Tom Darrow, Nancy Gerhardt Davies, Ernest Gundling,
Charity Hughes, MSOD, SPHR, John Lewison, SPHR, Colleen Mills, Ph.D., Ken
Moore, Maggie Romance, SPHR, Trellis Usher-Mays, Bill Young, SPHR
HR Consulting/Outsourcing Special Expertise Panel: Franchette Z. Richards, GPHR,
GMS, CRP
Copy Editing:
Katya Scanlan, copy editor
Design:
Shirley Raybuck, graphic designer
Production:
Bonnie Claggett, production traffic coordinator
This report is published by the Society for Human Resource Management (SHRM). All content is for informational purposes
only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept
responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.
© 2008 Society for Human Resource Management. All rights reserved. Printed in the United States of America.
This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any
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Human Resource Management, 1800 Duke Street, Alexandria, VA 22314, USA.
For more information, please contact:
SHRM Research Department
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Phone: (703) 548-3440 Fax: (703) 535-6432
Web: www.shrm.org/research
08-0280
HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
A Survey Report by the Society for Human Resource Management
May 2008
Contents
About This Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
About SHRM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Survey Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Critical HR Functional Areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
HR Responsibility Sourcing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
In-House HR Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Partially Outsourced HR Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Completely Outsourced HR Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Decisions About Sourcing HR Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Assignment of HR Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
HR Function/Department Staffing Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
HR’s Role Within the Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Strategic vs. Transactional Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
HR Mentoring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
HR’s Impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
HR Metrics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Tracking Staff Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Obstacles to HR Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Recently Published SHRM Survey Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
About This Report
In September 2007, the Society for Human Resource Management (SHRM)
conducted a survey about how human resource functional areas and responsibilities
are approached within organizations. This report presents an analysis of the HR in
Organizational Context Survey results and examines differences among organizations
by organization staff size and employment sector.
In 2007 and 2008, SHRM reviewed existing research to identify differences in how
organizations approach human resources. Workforce size has a profound effect on
the roles and responsibilities of HR functions within organizations. The results of
this review are compiled in a report titled The Varying Roles of HR: A Look at HR by
Organization Staff Size.1 Relevant findings from previous SHRM survey data included
in the review are presented in this report to contribute to the understanding of the
human resource function within organizations of various sizes.
About SHRM
The Society for Human Resource Management (SHRM) is the world’s largest
professional association devoted to human resource management. Our mission is to
serve the needs of HR professionals by providing the most current and comprehensive
resources and to advance the profession by promoting HR’s essential, strategic role.
Founded in 1948, SHRM represents more than 225,000 individual members in over
125 countries and has a network of more than 575 affiliated chapters in the United
States, as well as offices in China and India. Visit SHRM at www.shrm.org.
1
Introduction
How HR Operates Within Organizations Matters to Business
Strategy
Human resources includes a myriad of functional areas, encompassing responsibilities
from recruitment and staffing to compensation and benefits or training and
development. The human resource profession has evolved during the past 20 years and
continues to change, from the collective demographics of HR professionals and the
ways that practitioners enter the profession to the functions and roles served by HR and
the value it brings to organizations.2 HR is increasingly mobilized to offer much more
to organizations than record-keeping, payroll and employee benefits administration.
In fact, many of the transactional functions that traditionally formed the core of HR
departments’ responsibilities are now often outsourced so that organizations can focus
on business strategy through talent management and leadership development activities.
Yet, it is argued that HR functions and departments in many organizations are not
engaged in strategic roles. What factors contribute to how HR’s role is viewed within
the organization? Human resource functions and departments are typically bound
by a number of organizational factors, not the least of which is the staff size of the
organization. How do organizations determine which functional areas are critical to the
organizational strategy, the priority of critical functions and how to best develop and
assign HR staff to those functions?
While organization staff size clearly has an influence on the headcount and budget
within the organization’s HR function and/or department, there may be other factors
contributing to decisions about HR responsibility and functional area staffing. How
much control do HR professionals have over the functional areas to which they are
assigned and/or the scope of their responsibilities? To what extent are HR professionals
receiving mentoring about strategic contributions to the organization, including from
organization leaders in non-HR functions?
Understanding how HR is approached in the context of the organization in which it
operates is crucial to understanding how HR contributes to business strategies and
the value that it is poised to bring to the organization. Moreover, it adds to the overall
picture of HR professionals’ career progression expectations as well as non-HR business
leaders’ perceptions of and mentoring involvement with HR.
2
Understanding how
HR is approached
in the context of
the organization in
which it operates
is crucial to
understanding how
HR contributes to
business strategies
and the value that
it is poised to bring
to the organization.
Methodology
The survey was conducted among HR professionals employed by organizations
operating in the United States. The survey instrument included questions regarding
organizational practices and HR staffing related to human resource functions within
respondents’ organizations.
A sample of HR professionals was randomly selected from SHRM’s membership
database, which included approximately 225,000 individual members at the time the
survey was conducted. Only members who had not participated in a SHRM survey or
poll in the previous six months were included in the sampling frame. Members who
were students, consultants, academics, located internationally or had no e-mail address
on file were also excluded from the sampling frame. Beginning in September 2007,
an e-mail that included a link to the 2007 HR in Organizational Context Survey3 was
sent to 3,000 SHRM members. A total of 2,744 surveys were successfully delivered,
and 589 HR professionals responded, yielding a response rate of 21%. The survey was
fielded for a period of three weeks. Two e-mail reminders and a faxed reminder were
sent, and reminder phone calls were made to sample members in an effort to increase
the response rate.
The sample was representative of the SHRM membership population, although there
were some differences by organization staff size, with more HR professionals in this
sample from small- and medium-staff-sized organizations and fewer from large-staffsized organizations. HR professionals in this sample were more likely to report that
their HR departments had 1–4 employees and less likely to report that their HR
departments had larger numbers of employees. Compared with the general SHRM
membership, HR professionals in this sample were more likely to be from the service
(profit), manufacturing (durable goods) and health industries.
3
Key Findings
The top three critical HR functional areas that contributed to organizations’ current
business strategies were 1) staffing, employment and recruitment, 2) training and
development, and 3) employee benefits.
Among HR professionals who indicated that staffing, employment and recruitment was
one of their organizations’ top three critical HR functional areas, more than one-half
reported that it was their first priority.
The HR responsibilities most likely to be staffed in-house were performance
management, employee communication plans/strategies, policy development and/or
implementation, and strategic business planning. The HR responsibilities that were
most likely to be outsourced were employee assistance/counseling and flexible spending
account administration.
One-half of HR professionals reported that their organization’s business strategy
contributed to the decision of whether to staff, outsource or eliminate various HR roles
and responsibilities, suggesting an alignment of HR function staffing decisions with
business operating plans.
The largest percentage of HR professionals from organizations that intended to expand
their HR departments in the next 12 months reported that their decision to hire
additional HR staff was due to the HR department/function being understaffed for
current number of employees within the organization.
Slightly less than one-half of HR professionals reported that their organizations had
formal (i.e., documented and established) systems and processes in place for collecting
HR metrics and/or measurement data. Among these, slightly more than one-half
reported formally calculating the impact of HR activities on measurable aspects of
business performance.
The largest percentages of HR professionals reported that HR’s effectiveness was
limited by the budget and headcount available for HR initiatives.
4
The top three
critical HR
functional areas
that contributed
to organizations’
current business
strategies were
1) staffing,
employment
and recruitment,
2) training and
development,
and 3) employee
benefits.
Survey Results
Critical HR Functional Areas
Although conducting business and managing a workforce involves multiple human
resource activities, some HR functional areas are of more importance than others in
supporting the organization’s business strategies and operating plans. When asked to
identify the top three critical HR functional areas contributing to their organization’s
current business strategy, more than one-half of HR professionals (52%) reported that
staffing/employment/recruitment was among the most critical HR functional areas.
The next largest percentages of respondents reported that training and development
(29%) and employee benefits (29%) were among their top three critical HR functional
areas. This indicates that HR is most likely to support the organization’s business
strategy through human capital-related areas such as building, developing and
maintaining the workforce. The smallest percentages of HR professionals reported that
EEO/Affirmative Action (3%), international human resource management (HRM)
(1%) or research (less than 1%) were critical to their organization’s current business
strategy.
Staffing and employee benefits issues are often intertwined. John Lewison, SPHR,
director of human resources for MDRC and SHRM Organizational Development
Special Expertise Panel member, offers, “Both recruitment and talent retention are key
issues for our company. We are a large policy research organization in New York, where
attracting and retaining academic-trained experts in the fields of welfare, disability,
prison reform and education are key. While we’re anticipating that a softer economy
may make it easier for us to hire support-related staff in 2008, we’re still expecting a
competitive market for key researchers and economists.”
“We are constantly examining our benefit programs, not only from a competitive
perspective, but in terms of cost-effectiveness. This is especially true for our wellness
programs; e.g., medical, hospital and dental plans. With employees in large cities
on both coasts, like many companies, we’re hostage to the vagaries of escalating
medical costs. A while back we shifted to a self-insured model, coupled with stop-loss
insurance to better control our costs. So far, this approach seems to be working. We
also embarked on several cost-savings initiatives, such as increasing copayments and
deductibles. Many companies have taken similar actions,” says Lewison.
5
Table 1 | Which HR Functional Areas Are Most Critical to Contributing
to the Organization’s Current Business Strategy?
Overall
(n = 582)
Staffing/employment/recruitment
52%
Training/development
29%
Employee benefits
29%
Employee relations
27%
Strategic planning
27%
Administrative/transactional
18%
Change management
17%
Compensation
15%
Organizational development
15%
Legal compliance
13%
Communications
10%
Workforce planning/forecasting
10%
Human resource information systems (HRIS)
9%
Health, safety, security
8%
Diversity
7%
Labor/industrial relations
6%
HR metrics/measurement data/return on investment
5%
EEO/Affirmative Action
3%
International HRM
1%
Research
0%
Other
1%
Note: Data sorted in descending order. Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 2 | Critical HR Functional Areas Contributing to the Organization’s Current Business Strategy (by Organization Staff Size)
Overall
(n = 582)
Small
Medium
(1 to 99 employees) (100 to 499 employees)
(n = 142)
(n = 177)
Large
(500+ employees)
(n = 138)
Employee benefits
29%
35%
27%
20%
Small > large
Strategic planning
27%
19%
28%
34%
Large > small
Administrative/transactional
18%
25%
19%
11%
Small > large
Legal compliance
13%
19%
11%
7%
Small > large
Human resource information systems (HRIS)
9%
6%
8%
14%
Large > small
Diversity
7%
2%
5%
10%
Large > small
Note: Data sorted in descending order by “overall” column. Sample size is based on the actual number of respondents by organization staff size who answered this question
using the response options provided.
Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
6
Differences by
Organization
Staff Size
As shown in Table 2, several differences emerged in critical HR functional areas
according to organization staff size. HR professionals employed by small-staff-sized
organizations (1 to 99 employees) were more likely than HR professionals from largestaff-sized organizations (500 or more employees) to report that employee benefits
(35% compared with 20%), administrative/transactional functions (25% compared
with 11%) and legal compliance (19% compared with 7%) were among the top three
critical HR functional areas that contributed to their organizations’ business strategies.
By contrast, HR professionals from large organizations were more likely than their
counterparts employed by small organizations to place strategic planning (34%
compared with 19%), HRIS (14% compared with 6%) and diversity (10% compared
with 2%) among their organizations’ top three critical HR functional areas. In addition
to reflecting the organization’s business strategy, these data may also indicate the
organization’s philosophy of HR responsibilities as well as the availability of HR staff to
undertake selected functional areas and initiatives.
Table 3 depicts differences in critical HR functional areas based on organization sector.
HR professionals from nonprofit organizations (37%) were more likely to report employee
benefits as one of the top three critical HR functional areas than were respondents from
publicly owned for-profit organizations (18%). HR professionals from publicly owned forprofit organizations (36%) were more likely than their counterparts from privately owned
Related Research
SHRM recently reviewed previously
lenges experienced in supporting
they contribute strategically through
als in medium organizations may be
released survey data related to HR
HR functions and the varying ways
performing these responsibilities.
able to more immediately see the
roles and responsibilities in order
in which HR professionals bring
HR professionals from medium or-
impact of their activities on organiza-
to identify differences in how HR
value to organizations of different
ganizations (97%) were more likely
tion functions compared with their
is approached by organizations of
workforce sizes.
than those from small organizations
counterparts from large organiza-
various staff sizes. What emerged
(88%) to report that their HR de-
tions and may be more likely than
was a picture of HR professionals’
Although HR functional areas
partment strategically contributed “to
those in small organizations to feel
level of engagement in various HR
support organizational functions,
some extent” or “to a large extent”
that HR activities are an integral part
and other functional areas within
there are variations in the extent
to the organization’s recruitment and
of organization functions.
organizations, differences in chal-
to which HR departments feel that
selection processes. HR profession-
4
Extent to Which HR Department Strategically Contributes to Organization Functions (by Organization Staff Size)
Recruitment and selection processes
Overall
(n = 419)
Small
(1-99 employees)
(n = 111)
Medium
(100-499 employees)
(n = 174)
Large
(500+ employees)
(n = 120)
Differences by
Organization
Staff Size
94%
88%
97%
95%
Medium > small
Note: Table includes only response options for which there were significant differences between organization staff-size categories. Sample size is based on the actual number of
respondents by organization staff size who answered this question using the response options provided. Percentages include responses of “to some extent” and “to a large extent.” HR
professionals who responded “not sure” or “not applicable” were excluded from this analysis.
Source: SHRM 2006 Strategic HR Management Survey Report
7
for-profit organizations (21%) to report that strategic planning was among the top three
critical HR functional areas contributing to their organizations’ business strategy. Labor
and industrial relations were more likely to be among the top three critical HR functional
areas for government agencies (24%) than for publicly owned for-profit organizations (3%)
or privately owned for-profit organizations (3%).
Table 3 | C
ritical HR Functional Areas Contributing to the Organization’s Current Business Strategy (by Organization Sector)
Overall
(n = 582)
Publicly Owned For-Profit
(n = 114)
Privately Owned For-Profit
(n = 235)
Nonprofit
(n = 71)
Government
(n = 42)
Differences by Organization
Staff Size
Employee benefits
29%
18%
31%
37%
14%
Nonprofit > publicly owned for-profit
Strategic planning
27%
36%
21%
30%
29%
Publicly owned for-profit >
privately owned for-profit
Labor/industrial
relations
6%
3%
3%
6%
24%
Government > publicly owned for-profit,
privately owned for-profit, nonprofit
Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who answered
this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 4 | Priority Ratings of Critical HR Functional Areas Contributing to the Organization’s Current Business Strategy
First
Second
Third
Staffing/employment/recruitment (n = 266)
57%
23%
20%
Training/development (n = 144)
18%
44%
38%
Employee benefits (n = 138)
18%
39%
43%
Strategic planning (n = 135)
56%
25%
19%
Employee relations (n = 134)
26%
37%
37%
Administrative/transactional (n =92)
23%
28%
49%
Change management (n = 83)
36%
33%
31%
Compensation (n = 77)
31%
44%
25%
Organizational development (n = 77)
26%
39%
35%
Legal compliance (n = 60)
50%
38%
12%
Communications (n = 53)
30%
36%
34%
Workforce planning/forecasting (n = 51)
24%
33%
43%
Human resource information systems (HRIS) (n = 45)
22%
36%
42%
Health, safety, security (n = 35)
37%
37%
26%
Diversity (n = 35)
37%
31%
31%
Labor/industrial relations (n = 29)
28%
24%
48%
HR metrics/measurement data/return on investment (n = 26)
12%
27%
62%
Note: Data sorted in descending order by number of respondents who indicated that each HR functional area was among the top three areas critical to their organization’s current business strategy.
Rankings for each of the HR functional areas include only respondents who indicated that it was a top critical HR functional area contributing to the organization’s business strategy. Only critical
functional areas that at least 25 respondents selected as a top priority are included in table. Row percentages may not total 100% due to rounding.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
8
HR professionals were asked to rank the priority of their organizations’ top three critical
HR functional areas. Of the respondents who indicated that staffing/employment/
recruitment was a critical HR functional area, more than one-half (57%) reported that it
was the top-ranked priority for their organizations. More than one-half of respondents
(56%) who selected strategic planning as a critical HR functional area ranked it as the
top priority for their organizations. One-half of HR professionals (50%) who indicated
that legal compliance was one of their organizations’ top three critical HR functional
areas rated it as the first priority.
Among those who identified training and development as a critical HR functional
area, the largest percentage of HR professionals (44%) reported that it was the second
priority for their organizations. Of the HR professionals who indicated employee
benefits as a critical HR functional area, 43% responded that it was the third-ranked
priority within their organizations. These data and others depicted in Table 4 reflect
organizations’ workforce development philosophies as well as the predominant HR
functional areas to which organizational resources may be allocated.
SHRM Organizational Development Special Expertise Panel member Fernán Cepero,
PHR, vice president of human resources for YMCA of Greater Rochester, offers, “The
results are indicative of a Generation Y trend that is intertwined. Allow me to explain:
“The first critical area confirms the challenge HR professionals have in recruiting and
retaining Generation Y employees. The decision to accept a job offer involves many
factors for Generation Y. A good job is no longer defined by monetary gains alone. Gen Y
employees take a job because they want to work somewhere, not because they have to.
“The second critical area validates the first point in that training and development initiatives
must appeal Generation Y’s desire to learn and involve the application of high-technology
mediums, such as online media (i.e., webcasts, videos, podcasts, blogs, instant messaging).
Recruiting efforts must now highlight paid training and skill development.
“The third and final—benefits—requires HR to attract/sell Generation Y on benefits
such as flexible schedules, telecommuting and full tuition reimbursement. While all
employees think the benefits they receive as a part of their compensation packages are
an important factor in rating job satisfaction, what type of benefit they value is entirely
different. Gen Y employees don’t necessarily plan to stay at a company very long, and
both Gen Y and Gen X employees grew up without expectations of job security, so HR
professionals do not expect to win their loyalty by talking about ‘traditional benefits’
such as pension vesting or funeral leaves. To motivate these generations, focus more on
the benefits they value most—flexibility to balance work and life.”
HR Responsibility Sourcing
Which HR responsibilities are carried out in-house and which are outsourced, either
partially or completely? Table 5 depicts the sourcing of common HR responsibilities.
The vast majority of organizations that carry out performance management (94%),
employee communication plans/strategies (93%), policy development and/or
implementation (91%), strategic business planning (90%) and compensation and/
9
or incentive plans administration (85%) staff these HR responsibilities within their
organizations. This finding suggests that organizations strongly prefer to maintain
control over these HR responsibilities rather than to entrust them to a third party by
outsourcing. These may also be the HR responsibilities that require the most in-depth
understanding of the organization’s workforce and would be most difficult for a third
party to competently perform on the organization’s behalf.
Table 5 | Sourcing of HR Responsibilities
Completely In-House
Outsource Partially
Outsource Completely
Performance management (n = 482)
94%
5%
1%
Employee communication plans/strategies (n = 477)
93%
6%
1%
Policy development and/or implementation (n = 495)
91%
8%
1%
Strategic business planning (n = 463)
90%
8%
2%
Compensation and/or incentive plans administration (n = 489)
85%
13%
2%
HR metrics/measurement data/return on investment (n = 353)
82%
12%
6%
Organization development (n = 461)
78%
21%
1%
Recruitment/staffing of employees (nonexecutives) (n = 507)
78%
21%
1%
Affirmative Action Plans/EEO-1 filing (n = 382)
76%
20%
4%
Learning management system (n = 411)
61%
33%
7%
Human resource information systems (HRIS) development (n = 435)
59%
30%
11%
Payroll administration (n = 504)
59%
31%
10%
Employee relocation (n = 292)
57%
26%
18%
Expatriate administration (n = 178)
54%
36%
10%
Recruitment/staffing of executives (n = 492)
54%
40%
6%
Training and development programs (n = 480)
54%
42%
4%
Work/life balance benefits administration (n = 337)
53%
31%
17%
Wellness programs (n = 376)
40%
38%
22%
Consolidated Omnibus Budget Reconciliation Act (COBRA) (n = 491)
36%
18%
46%
Executive development and coaching (n = 407)
36%
50%
14%
Risk management/worker’s compensation (n = 484)
34%
46%
21%
Health care benefits administration (n = 504)
33%
40%
27%
Temporary staffing (n = 448)
30%
45%
25%
Background/criminal background checks (n = 462)
26%
22%
52%
Retirement benefits administration (n = 452)
25%
45%
31%
Pension benefits administration (n = 422)
24%
44%
33%
Retirement planning (n = 432)
23%
49%
28%
Employee assistance/counseling (n = 425)
17%
21%
62%
Flexible spending account administration (n = 411)
15%
25%
60%
Note: Data sorted in descending order by “completely in-house” column. HR professionals who responded “not applicable” were excluded from analysis. Row percentages may not total 100% due
to rounding.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
10
By contrast, more than one-half of organizations completely outsource employee
assistance/counseling (62%), flexible spending account administration (60%)
and background/criminal background checks (52%). Retirement benefits-related
responsibilities were among the HR responsibilities that the largest proportions of
organizations partially or completely outsourced, including retirement planning
(77%), pension benefits administration (76%) and retirement benefits administration
(75%). Retiree benefits are an area where many companies have recently made
changes, including freezing plans and changing from defined benefits plans to defined
contribution plans. Many organizations may find it more efficient and cost effective
to outsource the administration of their retiree benefits to firms that are highly
knowledgeable about the financial regulations involved with these types of plans and
benefits rather than to staff that specialization in-house.
Top 5 Insourced
HR Responsibilities
1) Performance management
2) Employee communication plans/
strategies
3) Policy development and/or
implementation
4) Strategic business planning
Views of HR’s role within the organization may also influence which functions are
outsourced. Comments Franchette Richards, GPHR, GMS, CRP, member of SHRM’s
HR Consulting/Outsourcing Special Expertise Panel, “Human resource functions
5) Compensation and/or incentive
plans administration
Related Research
Although critical HR functional
ganization. The results of the 2007
organizations reported to a greater
organization structure, workplace
areas may be clearly aligned with
Human Resource Competency
average extent that training and
policies and work process design
and prioritized according to the
Study yielded numerous differences
development added value to the
add value to the business. These
organization’s business strategy,
by organization staff size in HR
business. Compared with HR pro-
findings may reflect HR profes-
HR professionals’ perceptions of
professionals’ perceptions of how
fessionals from large organizations,
sionals’ general observation of
the extent to which various HR
various HR practices add value to
HR professionals from medium
immediate or lasting impact to
functional areas add value to the
the business.5 Compared with HR
organizations reported to a greater
the organization as a result of HR
organization’s business strategy
professionals from large organiza-
average extent that performance
practices.
may be linked to the size of the or-
tions, HR professionals from small
appraisal, internal communication,
Average Degree That Various HR Practices Add Value to the Business (by Organization Staff Size)
Small
(1-99 employees)
(n = 26)
Medium
(100-499 employees)
(n = 36)
Large
(500+ employees)
(n = 381)
Differences
by Organization
Staff Size
Training and development
4.24
4.11
3.76
Small > large
Performance appraisal
3.72
4.22
3.74
Medium > large
Internal communication
3.72
4.19
3.63
Medium > large
Organization structure
3.44
4.00
3.59
Medium > large
Workplace policies
3.88
4.42
3.87
Medium > large
Work process design
3.24
3.63
3.20
Medium > large
Note: Based on a scale where 1 = “to a very little extent” and 5 = “to a very large extent.” Greater numbers indicate greater average degrees that various HR practices add value to the
business. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided.
Source: RBL Group, University of Michigan Ross School of Business, SHRM, IAE School of Business, IMI, Tsinghua University, AHRI, and the National HRD Network. 2007 Human Resource
Competency Study [unpublished data]
11
that affect a company’s strategy, the overarching company culture or the organization
as a whole typically remain seated at the center of HR leadership. True organizational
effectiveness is not measured by the successful execution of a company’s employee
assistance program nor how it administers its flexible spending accounts. While these
are very important HR functions that clearly serve an organization’s employees,
these functions are more tactical in nature and not, in a strategic sense, impactful to
the achievement of business goals and objectives. In short, transactional excellence is
necessary—but no longer sufficient—for HR today. From evaluating the survey results
and reviewing ongoing commentary in the HR and business media, it has become
clearer that HR functions that are viewed as tactical are some of the first components
to be outsourced. There are exceptions—areas that are so key, so strategic (such as
leadership development/executive coaching, succession planning, employee relations)
that they must remain in-house. However, the key differentiator for HR will be whether
they are viewed as tactical or strategic.”
Numerous differences emerged in the sourcing of HR responsibilities when the data
were analyzed by organization staff size and organization sector. These findings are
shown in Table 6 through Table 11.
Top 5 Completely
Outsourced HR
Responsibilities
1) Employee assistance/counseling
2) Flexible spending account
administration
3) Background/criminal background
checks
4) Consolidated Omnibus Budget
Reconciliation Act (COBRA)
5) Pension benefits administration
In-House HR Responsibilities
As illustrated in Table 6, HR professionals employed by small-staff-sized organizations
were more likely to report in-house staffing of a number of HR responsibilities.
Compared with HR professionals from large-staff-sized organizations, HR professionals
Table 6 | HR Responsibilities Staffed Completely In-House (by Organization Staff Size)
Overall
Small
(1 to 99 employees)
Medium
(100 to 499 employees)
Large
(500+ employees)
Differences
by Organization
Staff Size
Policy development and/or implementation
(n = 451)
91%
84%
93%
96%
Medium, large > small
Strategic business planning (n = 415)
90%
95%
89%
83%
Small > large
Organization development (n = 360)
78%
85%
80%
71%
Small > large
Payroll administration (n = 298)
59%
50%
54%
73%
Large > small, medium
Employee relocation (n = 165)
56%
78%
56%
46%
Small > medium, large
Recruitment/staffing of executives (n = 264)
54%
63%
51%
41%
Small > large
Executive development and coaching
(n = 148)
36%
50%
33%
28%
Small > medium, large
Health care benefits administration (n = 168)
33%
44%
32%
26%
Small > large
Temporary staffing (n = 136)
30%
39%
29%
22%
Small > large
Retirement planning (i.e., educating
employees) (n = 98)
23%
20%
30%
15%
Medium > large
Employee assistance/counseling (n = 73)
17%
29%
13%
11%
Small > medium, large
Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of
respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
12
working at small-staff-sized organizations were more likely to report in-house staffing
of strategic business planning, organization development, recruitment/staffing of
executives, health care benefits administration and temporary staffing. Small-staffsized organizations were also more likely than either medium- or large-staff-sized
organizations to provide in-house staffing of employee relocation (78% compared
with 56% and 46%), executive development and coaching (50% compared with 33%
and 28%) and employee assistance/counseling (29% compared with 13% and 11%).
Retirement planning (i.e., educating employees) was more likely to be staffed in-house
by medium-staff-sized firms (30%) than by large-staff-sized organizations (15%). Both
large (96%) and medium organizations (93%) were more likely than small organizations
(84%) to report that policy development and/or implementation was staffed in-house.
By contrast, large organizations (73%) were more likely than either medium (54%) or
small organizations (50%) to report carrying out payroll administration in-house.
Several differences were identified when the in-house HR responsibility data were analyzed
by employment sector. The HR responsibilities that differed by organization sector in
the percentages of organizations that staffed them in-house were payroll administration,
employee relocation, recruitment/staffing of executives, recruitment/staffing of employees
(nonexecutives), work/life balance benefits administration, wellness programs, COBRA,
health care benefits administration, temporary staffing and background/criminal
background checks. Respondents from government agencies (76%) were more likely than
those from privately owned for-profit organizations (53%) to report in-house staffing of
payroll administration. HR professionals from publicly owned for-profit organizations
(36%) were less likely than those from government agencies (87%), nonprofit organizations
(76%) or privately owned for-profit organizations (65%) to report in-house staffing of
employee relocation activities. HR professionals from nonprofit organizations (90%) were
more likely than those from privately owned for-profit organizations (75%) or publicly
owned for-profit organizations (74%) to report that staffing recruitment of nonexecutive
employees was conducted in-house, whereas respondents from nonprofit organizations
(61%) and privately owned for-profit organizations (56%) were more likely than those
from publicly owned for-profit organizations (38%) to report that recruitment/staffing
of executives was conducted in-house. Work/life balance benefits administration was
more likely to be conducted in-house by nonprofit organizations (67%) than by publicly
owned for-profit organizations (43%). Wellness programs were more likely to be staffed
in-house by nonprofit organizations (64%) than by privately owned for-profit organizations
(39%), government agencies (34%) or publicly owned for-profit organizations (28%). HR
professionals from government agencies (56%) and nonprofit organizations (51%) were
more likely than those from publicly owned for-profit organizations (31%) or privately
owned for-profit organizations (31%) to report in-house staffing of responsibilities related
to COBRA. Respondents from nonprofit organizations (43%) and privately owned forprofit organizations (38%) were more likely than those from publicly owned for-profit
organizations (23%) to report that health care benefits administration was staffed in-house.
HR professionals from nonprofit organizations and government agencies were more likely
than those from publicly owned for-profit organizations to report in-house staffing of
duties related to temporary staffing and performing background/criminal background
checks. These data are shown in Table 7.
13
Table 7 | HR Responsibilities Staffed Completely In-House (by Organization Sector)
Overall
Publicly Owned Privately Owned
For-Profit
For-Profit
Nonprofit
Government
Differences by
Organization Sector
Payroll administration (n = 298)
59%
60%
53%
62%
76%
Government > privately owned for-profit
Employee relocation (n = 165)
57%
36%
65%
76%
87%
Privately owned for-profit, nonprofit,
government > publicly owned for-profit
Recruitment/staffing of executives
(n = 264)
54%
38%
56%
61%
61%
Privately owned for-profit, nonprofit >
publicly owned for-profit
Recruitment/staffing of employees
(nonexecutives) (n = 397)
54%
74%
75%
90%
86%
Nonprofit > publicly owned for-profit,
privately owned for-profit
Work/life balance benefits
administration (n = 177)
53%
43%
54%
67%
44%
Nonprofit > publicly owned for-profit
Wellness programs (n = 149)
40%
28%
39%
64%
34%
Nonprofit > publicly owned for-profit,
privately owned for-profit, government
Consolidated Omnibus Budget
Reconciliation Act (COBRA)
(n = 175)
36%
31%
31%
51%
56%
Nonprofit > publicly owned for-profit,
privately owned for-profit
Government > publicly owned for-profit,
privately owned for-profit
Health care benefits administration
(n = 168)
33%
23%
38%
43%
25%
Privately owned for-profit, nonprofit >
publicly owned for-profit
Temporary staffing (n = 136)
30%
19%
30%
45%
45%
Nonprofit, government > publicly owned
for-profit
Background/criminal background
checks (n = 120)
26%
15%
25%
38%
43%
Nonprofit, government > publicly owned
for-profit
Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is
based on the actual number of respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 8 | HR Responsibilities Outsourced Partially (by Organization Staff Size)
Overall
Small
(1 to 99 employees)
Medium
(100 to 499 employees)
Large
(500+ employees)
Differences by Organization
Staff Size
Executive development and
coaching (n = 203)
50%
36%
50%
60%
Large > small
Risk management/worker’s
compensation (n = 221)
46%
37%
49%
52%
Large > small
Health care benefits
administration (n = 201)
40%
32%
46%
41%
Medium > small
Recruitment/staffing of executives
(n = 199)
40%
32%
41%
53%
Large > small
Policy development and/or
implementation (n = 40)
8%
14%
6%
4%
Small > large
Strategic business planning
(n = 39)
8%
2%
10%
14%
Medium, large > small
Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of
respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
14
Partially Outsourced HR Responsibilities
Table 8 depicts the differences by organization staff size in the percentages of
organizations that partially outsourced various HR responsibilities. According to HR
professionals, large-staff-sized organizations were more likely than small-staff-sized
organizations to have partially outsourced executive development and coaching (60%
compared with 36%), risk management/worker’s compensation (52% compared with
37%), recruitment/staffing of executives (53% compared with 32%) and strategic
business planning (14% compared with 2%). Medium organizations were more
likely than small organizations to report partially outsourcing health care benefits
administration (46% compared with 32%) and strategic business planning (10%
compared with 2%). By contrast, HR professionals from small organizations (14%) were
more likely than their counterparts at large organizations (4%) to report that policy
development and/or implementation was partially outsourced.
As shown in Table 9, differences emerged among organization sectors for HR
responsibilities that were partially outsourced. HR professionals from government
agencies (50%) were more likely than their counterparts at privately owned for-profit
organizations (26%) to report that their human resource information systems (HRIS)
development was partially outsourced. According to HR professionals, pension benefits
administration was more likely to be partially outsourced by privately owned for-profit
organizations (51%) than by publicly owned for-profit organizations (32%). Partial
outsourcing of recruitment/staffing of executives and wellness programs was more
likely to be reported by HR professionals from publicly owned for-profit organizations
(54% and 47%, respectively) than by HR professionals from nonprofit organizations
Table 9 | HR Responsibilities Outsourced Partially (by Organization Sector)
Overall
Publicly Owned
For-Profit
Privately Owned
For-Profit
Nonprofit
Government
Differences by
Organization Sector
Pension benefits administration
(n = 184)
44%
32%
51%
48%
32%
Privately owned for-profit >
publicly owned for-profit
Recruitment/staffing of
executives (n = 199)
40%
54%
39%
31%
37%
Publicly owned for-profit >
nonprofit
Wellness programs
(n = 144)
38%
47%
39%
21%
44%
Publicly owned for-profit >
nonprofit
Human resource information
systems (HRIS) development
(i.e., software selection and
implementation)
(n = 131)
30%
33%
26%
24%
50%
Government > privately owned
for-profit
Employee relocation
(n = 75)
26%
35%
19%
24%
13%
Publicly owned for-profit >
privately owned for-profit
Recruitment/staffing of
employees (nonexecutives)
(n = 104)
21%
25%
24%
9%
14%
Publicly owned for-profit,
privately owned for-profit >
nonprofit
Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is
based on the actual number of respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
15
(31% and 21%, respectively). Respondents from publicly owned for-profit organizations
(35%) were more likely than those from privately owned for-profit organizations (19%)
to report partially outsourcing responsibilities related to employee relocation. HR
professionals from publicly owned for-profit organizations (25%) and privately owned forprofit organizations (24%) were more likely than those from nonprofit organizations (9%)
to report that recruitment/staffing of nonexecutive employees was partially outsourced.
Table 10 | HR Responsibilities Outsourced Completely (by Organization Staff Size)
Overall
Small
(1 to 99 employees)
Medium
(100 to 499 employees)
Large
(500+ employees)
Differences by
Organization Staff Size
Employee assistance/counseling (n = 263)
62%
49%
65%
70%
Medium, large > small
Flexible spending account administration
(n = 248)
60%
51%
62%
68%
Large > small
Temporary staffing (n = 112)
25%
20%
21%
37%
Large > small, medium
Employee relocation (n = 52)
18%
5%
19%
26%
Medium, large > small
Payroll administration (n = 48)
10%
14%
10%
2%
Small, medium > large
Note: Data sorted in descending order by “overall” column. Table includes only response options for which there were significant differences. Sample size is based on the actual number of
respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 11 | HR Responsibilities Outsourced Completely (by Organization Sector)
Overall
Publicly Owned
For-Profit
Privately Owned
For-Profit
Nonprofit
Government
Differences by
Organization Sector
Background/criminal
background checks (n = 240)
52%
64%
55%
45%
19%
Publicly owned for-profit >
government
Privately owned for-profit >
government
Nonprofit > government
Consolidated Omnibus Budget
Reconciliation Act (COBRA)
(n = 228)
46%
48%
52%
33%
28%
Privately owned for-profit > nonprofit,
government
Pension benefits administration
(n = 138)
33%
44%
29%
23%
37%
Publicly owned for-profit > nonprofit
Health care benefits
administration (n = 135)
27%
39%
24%
11%
35%
Publicly owned for-profit >
privately owned for-profit, nonprofit
Government > nonprofit
Temporary staffing (n = 112)
25%
39%
23%
15%
18%
Publicly owned for-profit > privately
owned for-profit, nonprofit
Employee relocation (n = 52)
18%
29%
15%
0%
0%
Publicly owned for-profit > privately
owned for-profit
Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Table includes only response options for which there were significant differences. Sample size is
based on the actual number of respondents who indicated that their organization supported each HR responsibility.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
16
Completely Outsourced HR Responsibilities
Table 10 shows the differences in the percentages of organizations by staff size that
reported completely outsourcing various HR responsibilities. HR professionals from
large- and medium-staff-sized organizations were more likely than those from smallstaff-sized organizations to report completely outsourcing employee assistance/
counseling (70% and 65% compared with 49%, respectively) and employee relocation
(26% and 19% compared with 5%). Large organizations (68%) were more likely than
small organizations (51%) to report completely outsourcing flexible spending account
administration and were also more likely than either medium or small organizations
(37% compared with 21% and 20%, respectively) to report completely outsourcing
temporary staffing. By contrast, HR professionals at small organizations (14%)
and medium organizations (10%) were more likely than their counterparts at large
organizations (2%) to report completely outsourcing payroll administration.
HR professionals from publicly owned for-profit organizations (64%), privately owned
for-profit organizations (55%) and nonprofit organizations (45%) were more likely than
their counterparts at government agencies (19%) to report completely outsourcing
background/criminal background checks. Respondents from privately owned for-profit
organizations (52%) were more likely than those from nonprofit organizations (33%)
or government agencies (28%) to report completely outsourcing responsibilities related
to COBRA. HR professionals from publicly owned for-profit organizations (44%)
were more likely than those from nonprofit organizations (23%) to report completely
outsourcing pension benefits administration. Employee relocation was more likely to
be completely outsourced by publicly owned for-profit organizations (29%) than by
privately owned for-profit organizations (15%). HR professionals from publicly owned
for-profit organizations (39%) were more likely than those from privately owned forprofit organizations (24%) and those from publicly owned for-profit organizations
and government agencies (both 35%) were more likely than their counterparts at
nonprofit organizations (11%) to report completely outsourcing health care benefits
administration. According to HR professionals, temporary staffing was more likely to
be completely outsourced by publicly owned for-profit organizations (39%) than by
privately owned for-profit organizations (23%) or nonprofit agencies (15%). These data
are shown in Table 11.
Decisions About Sourcing HR Responsibilities
Given the myriad HR functional areas and the limits to most organizations’ HR
department/function headcount, what factors contribute to decisions about sourcing
HR responsibilities? When asked how their organizations determine which HR roles
and/or responsibilities will be staffed within the organization rather than outsourced
or eliminated, the largest percentage of HR professionals (50%) reported that the
organization’s business strategy contributes to the decision. These data are shown
Figure 1. This suggests that for a substantial percentage of organizations, HR function
staffing decisions are aligned with business operating plans, providing support for a
strategic partnership between HR and the organization as a whole. The next two largest
percentages of HR professionals reported that competencies of HR staff (45%) and the
organization’s workforce management needs (40%) determined which specific HR roles
17
and/or responsibilities would be staffed, outsourced or eliminated. Only one out of 10
HR professionals responded that their organization made decisions about sourcing HR
roles and/or functional areas based on HR consultant evaluations and/or advice (11%)
or employee feedback and requests (11%), indicating that few organizations make HR
staffing or outsourcing decisions based on input from outside of the organization or from
the bottom up. Trellis Usher-Mays, founder and chief people strategist, T.R. Ellis Group
LLC, and member of SHRM’s Organizational Development Special Expertise Panel,
comments, “Corporate leaders and HR practitioners are wising up to the fact that the HR
function is critical to driving sustainable business results. As HR continues to transform
itself from a transactional to a strategic partner, it becomes even more important to
make sure that practitioners are building skills that enable them to think strategically
and systemically, build and manage relationships and thoroughly analyze organizational
issues. Part of HR’s value proposition has to be our intimate knowledge of our internal
Figure 1 | How Do Organizations Decide Which HR Roles and/or Functional Areas Will Be Staffed?
50%
Organization’s business strategy
45%
Competencies of HR staff
40%
Organization’s workforce management needs
36%
HR department staffing budget
23%
Ongoing established staffing of the role and/or responsibility
20%
Internal audit or review of HR processes
Employee feedback and requests
11%
HR consultant evaluations and/or advice
11%
(n = 509)
Note: Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
18
customers’ business and industry and not simply our functional HR expertise. The more
closely aligned HR is to the organization’s strategic objectives, the more value it can add
and the less we have to worry about being outsourced or eliminated.”
Organization staff size has an impact on factors determining which HR roles and
functional areas will be staffed within the organization. HR professionals from large
organizations (46%) were more likely than their counterparts from small organizations
(25%) to report that the HR department’s staffing budget was a factor in determining
which HR roles/functional areas would be staffed. This finding may be related to the
prevalence of HR specialists versus HR generalists in large organizations compared
with small organizations. In addition, large organizations were more likely than small
organizations or medium organizations to report that an internal audit or review of
HR processes (32% compared with 13% and 16%, respectively) or HR consultant
evaluations and/or advice (19% compared with 8% and 6%, respectively) contributed to
their organizations’ decisions about staffing HR roles and/or functional areas. These
findings are not surprising, given that large organizations may have more of a need as
well as more resources such as time and money to allow them to undertake a formal
internal audit of HR processes or contract the services of HR consultants to review HR
processes. These data are depicted in Table 12.
Organization sector also had an impact on factors determining the HR roles and/or
functional areas to be staffed (Table 13). An organization’s business strategy factored
into decisions about HR role/functional area staffing for 62% of publicly owned forprofit organizations compared with 45% of privately owned for-profit organizations
and 38% of government agencies. Publicly owned for-profit organizations may be
more likely to expect operating plan alignment across the organization’s divisions
and departments, including human resource functions. More than two-thirds of HR
professionals from government agencies (69%), compared with only about one-third
of HR professionals from publicly owned for-profit organizations (35%), reported
that competencies of HR staff were a factor in determining staffing of HR roles and/
or functional areas. This suggests that, to a certain extent, HR professionals who are
employed in the government sector may have some degree of influence over the HR
Table 12 | Factors Determining the HR Roles and/or Functional Areas to Be Staffed (by Organization Staff Size)
Overall
(n = 509)
Small
(1 to 99 employees)
(n = 131)
Medium
(100 to 499 employees)
(n = 167)
Large
(500+ employees)
(n = 134)
Differences
by Organization
Staff Size
HR department staffing budget
36%
25%
37%
46%
Large > small
Internal audit or review of HR
processes
20%
13%
16%
32%
Large > small, medium
HR consultant evaluations and/
or advising
11%
8%
6%
19%
Large > small, medium
Note: Data sorted in descending order by “overall” column. Percentages do not total 100% due to multiple response options. Sample size is based on the actual number of respondents by
organization staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
19
responsibilities that will be staffed in-house through the experience that they bring to
and/or attain in the position. HR consultant evaluations and/or advice determined
staffing for HR roles and/or functional areas for 18% of publicly owned for-profit
organizations compared with 8% of privately owned for-profit organizations. This
finding may be due in part to publicly owned for-profit organizations having more
resources available to engage the services of HR consultants.
Assignment of HR Responsibilities
How are HR responsibilities distributed amongst HR function and/or department
staff? More than one-quarter of respondents (29%) reported that their organizations
did not have more than one HR staff person, suggesting that all HR roles and/or
responsibilities that were carried out in-house by their organizations were handled
by a single HR function employee. This is logical, given that of the respondents who
reported that their organizations did not have more than one HR staff person, 68%
were from small-staff-sized organizations and 32% were from medium-staff-sized
organizations. Among organizations with multiple HR staff, nearly two-thirds of HR
professionals (63%) indicated that their HR staff simultaneously handled multiple
HR functional areas for the organization, i.e., generalist roles. About one-quarter of
respondents (24%) responded that their organization’s HR staff were hired into and
advanced within single HR functional area tracks based on their experience and/or
education. Just 1% of HR professionals reported that their HR staff had scheduled
rotations among HR functional areas supported by the organization’s HR department/
function. These data, shown in Figure 2, indicate that HR professionals who are
employed as specialists or within limited HR functional areas may have some degree of
flexibility for selecting the responsibilities that they perform.
Both nonprofit (42%) and privately owned for-profit organizations (38%) were more
likely than government agencies (12%) and publicly owned for-profit organizations
(11%) to report that their organizations did not have more than one HR staff person.
Unsurprisingly, small organizations (65%) were more likely than medium organizations
Table 13 | Factors Determining the HR Roles and/or Functional Areas to Be Staffed (by Organization Sector)
Overall
(n = 509)
Publicly Owned
For-Profit
(n = 109)
Privately Owned
For-Profit
(n = 221)
Nonprofit
(n = 65)
Government
(n = 41)
Differences by
Organization Sector
Organization’s business
strategy
50%
62%
45%
52%
38%
Publicly owned for-profit >
privately owned for-profit,
government
Competencies of HR staff
45%
35%
49%
46%
69%
Government > publicly owned
for-profit
HR consultant evaluations
and/or advising
11%
18%
8%
7%
17%
Publicly owned for-profit >
privately owned for-profit
Note: Data sorted in descending order by “overall” column. Excludes “other” organization sectors. Percentages do not total 100% due to multiple response options. Sample size is based on
the actual number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant
differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
20
(24%) and large organizations (1%), and medium organizations were more likely than
large organizations, to report that their organizations did not have more than one HR
staff person.6
Among organizations with multiple HR staff, differences emerged by organization staff
size in the percentages of organizations that reported that their HR staff simultaneously
handled multiple HR functional areas for the organization (Table 14). Medium
organizations (71%) were more likely than large organizations (57%) to report that their
HR staff held generalist roles. There were no significant differences by organization
sector.
More often than not, among organizations with multiple HR staff, some—if not all—of
these staff operate from a single location. More than two-thirds of HR professionals
from organizations with multiple HR staff (69%) reported that the organization’s HR
department was primarily centralized (Figure 3). Another 21% indicated that they were
split between corporate headquarters and field offices, and only 10% reported that their
organization’s HR staff were primarily decentralized.
For many organizations, HR departments/functions serve as default owners for
responsibilities that are not directly HR-related but are necessary to operations and do
not have a more suitable department match. In addition to their responsibilities related
Figure 2 | How Are HR Staff Roles and/or Responsibilities Assigned?
63%
HR staff simultaneously handle multiple roles
24%
HR staff are hired into single HR functional tracks
9%
HR staff may request to switch HR functional area tracks
HR staff have rotations among HR functional areas
Other
1%
3%
(n = 361)
Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.”
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
21
to HR functions, one-half of HR professionals (50%) reported having other non-HR
duties. This may include facilities, IT, administration and other responsibilities.7
HR professionals from small organizations (79%) were more likely than those from
medium (48%) and large organizations (22%), and HR professionals from medium
organizations were more likely than their counterparts from large organizations, to
report that they had non-HR duties in addition to their HR responsibilities (Table 15).
Organizations with fewer staff are more likely to assign cross-functional roles to HR
departments or functions than larger organizations, which can more easily establish
Table 14 | F
actors Determining HR Staff Assignments of HR Roles and/or Responsibilities (by Organization Staff Size)
Overall
(n = 361)
Small
(1 to 99 employees)
(n = 50)
Medium
(100 to 499 employees)
(n = 136)
Large
(500+ employees)
(n = 138)
Differences
by Organization
Staff Size
63%
68%
71%
57%
Medium > large
HR staff simultaneously handle
multiple HR functional areas for
the organization (i.e., generalist
roles)
Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.” Sample size is based on the actual number of respondents by organization
staff size who answered this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Figure 3 | Where Are HR Staff Located Within the Organization?
69%
21%
10%
Primarily centralized
Split between headquarters
and field offices
(n = 345)
Note: Excludes HR professionals who responded, “N/A, my organization does not have more than one HR staff person.”
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
22
Primarily decentralized
departmental duty boundaries because they are likely to have other, more appropriate
departments with available headcount for handling non-HR duties.
HR professionals from privately owned for-profit organizations (59%) as well as those
from nonprofit organizations (59%) were more likely than those from publicly owned
for-profit organizations (37%) and government agencies (26%) to indicate having
non-HR duties in addition to their HR responsibilities (Table 16). Staff size within the
sectors may have an impact on the likelihood of HR functions or departments being
tasked with non-HR related responsibilities.
HR Function/Department Staffing Changes
What are organizations’ planned headcount changes for the short-term future?
Although the majority of HR professionals (72%) reported that their HR staff
headcount will most likely remain the same during the next 12 months, one-quarter
of respondents (25%) indicated that their HR staff headcount will grow during that
timeframe (Figure 4). Very few organizations—just 3%—expected a decrease in HR
staff numbers. Even in a slowing economy, HR functions or departments may be more
resistant to downsizing due to the essential nature of their responsibilities on behalf of
the organization’s workforce. This may be even more the case for organizations whose
HR departments or functions are comprised of generalist roles and where multiple HR
roles and responsibilities can be assigned to each HR staff person.
Table 15 | HR Staff Have Non-HR Duties (by Organization Staff Size)
HR has non-HR duties
Overall
(n = 508)
Small
(1 to 99 employees)
(n = 141)
Medium
(100 to 499 employees)
(n = 172)
Large
(500+ employees)
(n = 138)
Differences
by Organization
Staff Size
50%
79%
48%
22%
Small > medium, large
Medium > large
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 16 | HR Staff Have Non-HR Duties (by Organization Sector)
HR has non-HR duties
Overall
(n = 508)
Publicly Owned
For-Profit
(n = 114)
Privately Owned
For-Profit
(n = 234)
Nonprofit
(n = 71)
Government
(n = 42)
Differences
by Organization Sector
50%
37%
59%
59%
26%
Privately owned for-profit > publicly
owned for-profit, government
Nonprofit > publicly owned
for-profit, government
Note: Excludes HR professionals who responded “not sure” to this item and those from “other” organization sectors. Sample size is based on the actual number of respondents by organization sector
who answered this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
23
HR professionals from large organizations (36%) were more likely than those from
medium (21%) or small organizations (16%) to report that their organization’s HR staff
headcount was expected to increase in the 12 months following the survey. Conversely,
small organizations (82%) and medium organizations (76%) were more likely than large
organizations (60%) to report that their organization’s HR headcount was expected to
remain the same in the upcoming 12 months. These data are depicted in Table 17.
Figure 4 | Will the HR Staff Headcount Change in the Next 12 Months?
72%
25%
3%
HR headcount will increase
HR headcount will remain the same
HR headcount will decrease
(n = 430)
Note: Excludes HR professionals who responded “not sure” to this item.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 17 | HR Staff Headcount Changes Expected for Next 12 Months (by Organization Staff Size)
Overall
(n = 430)
Small
(1 to 99 employees)
(n = 141)
Medium
(100 to 499 employees)
(n = 172)
Large
(500+ employees)
(n = 138)
Differences
by Organization
Staff Size
HR headcount will increase
25%
16%
21%
36%
Large > small, medium
HR headcount will remain the same
72%
82%
76%
60%
Small > large
Medium > large
HR headcount will decrease
3%
2%
3%
3%
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
24
As shown in Table 18, there were fewer differences in changes to HR headcount by
organization sector. Although a small percentage of organizations overall expected
a decrease in HR headcount, HR professionals from publicly owned for-profit
organizations (8%) were more likely than those from privately owned for-profit
organizations (1%) to report that their organization’s HR staff headcount was
expected to decrease in the 12 months following the survey. Publicly owned for-profit
organizations may be more sensitive to mergers, acquisitions and large-scale downsizing
efforts that might include HR department staff as well as other line operations within
the organization.
Among HR professionals employed by organizations that expected to increase their
number of HR staff over the next year, the largest percentage (49%) reported that their
decision to hire additional HR staff was due to the HR department/function being
understaffed for current workforce size. This is consistent with the traditional view
of the HR department size as a ratio to the total number of organization employees.
However, more than two of out five HR professionals (44%) that were expanding their
HR functions/departments reported that the organizational business strategy created
new priorities for HR roles and/or functions, requiring the hiring of additional HR
staff. This finding, again, supports the notion that within many organizations, the HR
function/department operations are closely aligned with the organization’s business
operations. These data are illustrated in Figure 5.
Among HR professionals employed by organizations that expected to increase their
HR staff headcount in the next 12 months, those from publicly owned for-profit
organizations (32%) were more likely than those from privately owned for-profit
organizations (6%) to report that a shift in workforce demographics and/or needs
contributed to the decision to hire additional staff (Table 19). The U.S. workforce is
changing through an aging baby boom generation, the work/life balance demands
of younger workers and an increasingly diverse general population. According to
employees, benefits tied with compensation as the top-rated most important aspect
contributing to job satisfaction.8 Further, workers aged 35 and younger and workers
employed by large-staff-sized organizations placed the greatest importance on benefits
Table 18 | HR Staff Headcount Changes Expected for Next 12 Months (by Organization Sector)
Overall
(n = 430)
Publicly Owned
For-Profit
(n = 92)
Privately Owned
For-Profit
(n = 205)
Nonprofit
(n = 63)
Government
(n = 34)
HR headcount will increase
25%
27%
25%
22%
18%
HR headcount will remain
the same
72%
65%
74%
76%
82%
HR headcount will
decrease
3%
8%
1%
2%
0%
Differences by Organization
Sector
Publicly owned for-profit >
privately owned for-profit
Note: Excludes “other” organization sectors and HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization sector who
answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
25
Figure 5 | Hiring Additional HR Staff: Which HR and Organizational Factors Matter?
HR department/function is understaffed for current workforce size
49%
Organizational business strategy created new priorities for HR roles and/or functions
44%
HR department/function is expanding in anticipation of increase in workforce
43%
Unaccompplished work projects require adding staff in order to meet business goals
23%
HR department/function is expanding to manage recruitment and hiring needs following
high turnover in workforce
22%
HR department/function needs new or additional staff to manage the technology systems
that support HR functional areas
18%
HR department/function staffing structure requires new or additional managers or
executive-level staff
16%
Shift in workforce demographics and/or needs requires additional HR staff to manage
related programs
Previously outsourced HR functions are being pulled in-house
12%
3%
(n = 107)
Note: Includes HR professionals who indicated that their HR staff headcount would increase over the next 12 months. Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 19 | F
actors Contributing to Decision to Hire Additional HR Staff (by Organization Sector)
Shift in workforce demographics and/
or needs requires additional HR staff to
manage related programs
Overall
(n = 107)
Publicly Owned
For-Profit
(n = 25)
Privately Owned
For-Profit
(n = 52)
Nonprofit
(n = 14)
Government
(n = 6)
Differences
by Organization
Sector
12%
32%
6%
7%
0%
Publicly owned for-profit >
privately owned for-profit
Note: Includes HR professionals who indicated that their HR staff headcount would increase over the next 12 months. Excludes “other” organization sectors. Sample size is based on the actual
number of respondents by organization sector who answered this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
26
as a factor in job satisfaction. Publicly owned for-profit organizations may be under
more pressure to customize their benefits programs to meet the benefits demands of the
workforce, potentially requiring specialized HR staff to manage them.
HR’s Role Within the Organization
Strategic vs. Transactional Role
How do HR professionals view their HR function/department’s role within their
organization? As shown in Figure 6, nearly two-thirds of HR professionals (61%)
viewed their HR function/department’s role as equally strategic and transactional. Onethird of respondents (33%) reported that their HR function/department’s role was
primarily transactional, indicating that one out of three HR function/departments serve
a traditional HR role within organizations. Only 6% of HR professionals viewed their
HR function/department’s role within the organization as primarily strategic.
There were differences by both organization sector and organization staff size in HR
professionals’ perceptions of the HR function or department’s role. HR professionals
from publicly owned for-profit organizations (10%) were more likely than their
counterparts from privately owned for-profit organizations (3%) to report that they
viewed their HR function or department as having a primarily strategic role. HR
professionals from small organizations (42%) were more likely than those from large
organizations (26%) to report that they viewed their HR function or department as
having a primarily transactional role within their organization (Table 20). In smaller
organizations, the HR function or department—which may be limited to a single
employee—may have interactions with other staff that more often than not center
around duties directly related to human capital management, contributing to a feeling
Related Research
Results from the SHRM 2007
in the percentages of organizations
als from large organizations (29%)
change management programs dur-
Change Management Survey
that devoted HR staff full time to
were more likely than those from
ing major organizational changes.
Report noted that there were dif-
change management programs.
small organizations (12%) to
ferences by organization staff size
As shown below, HR profession-
have HR staff devoted full time to
HR Staff Devoted Full Time to Change Management Programs (by Organization Staff Size)
HR staff devoted
full-time to change
management programs
Overall
(n = 292)
Small
(1-99 employees)
(n = 72)
Medium
(100-499 employees)
(n = 105)
Large
(500+ employees)
(n = 90)
Differences
by Organization
Staff Size
23%
12%
19%
29%
Large > small
Note: Excludes HR professionals who indicated that HR was not involved in major changes in their organizations and those who responded “not sure” to this item.
Source: SHRM 2007 Change Management Survey Report
27
of having a primarily transactional role. Moreover, the organizational strategy of small
organizations may be set by top management, with less opportunity for HR to be
involved in shaping the strategy of the organization, particularly in the absence of
senior-level HR staff. Of the differences according to organization staff size, Libby
Anderson, M.S., SPHR, EDA Human Resource Services and member of SHRM’s
Organizational Development Special Expertise Panel, notes, “My feeling is that the
organization’s budget dictates the type of work, and while we know strategic work
contributes to the bottom line, we are still working toward defining that in a tangible
way. The smaller companies don’t see HR as strategic because they often have a
Figure 6 | How Do HR Professionals Perceive Their HR Function/Department’s Role Within the Organization?
61%
33%
6%
Primarily strategic
Equally strategic and transactional
Primarily transactional
(n = 468)
Note: Excludes HR professionals who responded “not sure” to this item.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 20 | HR Professionals’ Perceptions of Their HR Function/Department’s Role
Within the Organization (by Organization Staff Size)
Overall
(n = 468)
Small
(1 to 99 employees)
(n = 137)
Medium
(100 to 499 employees)
(n = 169)
Large
(500+ employees)
(n = 135)
Primarily strategic
6%
5%
4%
7%
Equally strategic and transactional
61%
53%
63%
67%
Primarily transactional
33%
42%
33%
26%
Differences
by Organization
Staff Size
Small > large
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
28
budget that doesn’t support an advanced level of HR professional. So they have HR
people who don’t have as much experience and therefore are primarily transactional. 
Therefore, more HR professionals have to augment their focus on strategy with more
tangible (transactional) activities.”
HR professionals’ perception of how HR’s role is viewed by various levels within the
organization varied depending on level, as shown in Table 21. A larger percentage
of HR professionals believed that the board of directors (15%), compared with
other levels within the organization, perceived the organization’s HR department/
function as having a primarily strategic role. The board of directors’ involvement
with the organization’s human capital management efforts may be limited to broad
overviews of current activities and future directions rather than the details of the
specific tasks or transactions. About two-thirds of respondents (65%) indicated that
the organization’s C-suite and executive-level employees viewed HR’s role as equally
strategic and transactional, and about one-quarter of respondents (26%) felt that the
HR department/function was perceived by the C-suite and executives as having a
primarily transactional role. Although 53% of HR professionals felt that manager-level
employees perceived HR as having an equally strategic and transactional role within
the organization and 45% believed that HR was perceived in a primarily transactional
role by this staff level, nearly-three quarters of respondents (70%) indicated that
nonmanagerial employees perceived HR as having a primarily transactional role within
the organization. This perception may indicate a greater proportion of administrative
interactions between HR departments or functions and rank-and-file employees
compared with more multidimensional interactions between HR and other levels
within the organization, particularly in organizations where HR is involved in strategic
planning. HR may need to improve communication with rank-and-file employees
regarding HR’s strategic capabilities and its value to the organization. According to Bill
Young, SPHR, managing consultant, Leadership, Learning & Performance at Williams,
and past member of SHRM’s Organizational Development Special Expertise Panel,
“For many employees, HR is simply getting the paycheck on time or resolving a benefit
question when it arises. It is only when HR interacts with leaders in crafting the people
strategy does the true value of HR shine. Consequently, unless an employee is involved
Table 21 | HR Professionals’ Perceptions of How Various Groups View the HR Function/Department’s Role
Primarily
Strategic
Equally Strategic
and Transactional
Primarily
Transactional
HR professionals (n = 468)
6%
61%
33%
Board of directors (n = 303)
15%
54%
31%
C-suite and executive-level employees (n = 425)
9%
65%
26%
Manager-level employees (n = 462)
2%
53%
45%
Nonmanagerial employees (n = 443)
2%
28%
70%
Note: Excludes HR professionals who responded “not sure” to this item. Row percentages may not total 100% due to rounding.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
29
in the strategy development of an organization, the vast majority of HR he or she is
exposed to is transactional and tactical.”   
As illustrated in Table 22, HR professionals from large organizations (20%) were more
likely than those from medium organizations (8%) to report that the board of directors
viewed the HR function/department’s role as primarily strategic. Large organizations
may be more likely to have a chief human resource officer or similar high-level position
that participates in and contributes to strategic planning efforts involving the board of
directors.
Organization sector also had an effect on HR professionals’ views of the board of
directors’ perceptions of the HR function/department’s role. HR professionals from
publicly owned for-profit organizations (24%) were more likely than those from
privately owned for-profit organizations (9%) to report that they believed that the board
of directors viewed the HR function/department’s role as primarily strategic (Table
23). Publicly owned for-profit organizations may be more likely than privately owned
for-profit organizations to have a business strategy that is heavily focused on gaining
competitive advantage by leveraging talent management, an undertaking that HR
typically leads and of which the board of directors is often keenly aware. Conversely,
HR professionals from privately owned for-profit organizations (40%) were more likely
than those from nonprofit organizations (19%) to report that they believed that the
board of directors viewed the HR function/department’s role as primarily transactional.
Table 22 | HR Professionals’ Perceptions of Board of Directors’ Views of Organization’s
HR Function/Department’s Role (by Organization Staff Size)
Overall
(n = 303)
Small
(1 to 99 employees)
(n = 87)
Medium
(100 to 499 employees)
(n = 111)
Large
(500+ employees)
(n = 88)
Differences
by Organization
Staff Size
Primarily strategic
15%
13%
8%
20%
Large > medium
Equally strategic and transactional
54%
52%
60%
50%
Primarily transactional
31%
36%
32%
30%
Note: Excludes HR professionals who responded “not sure” to this item. Column percentages may not total 100% due to rounding. Sample size is based on the actual number of respondents by
organization staff size who answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 23 | HR Professionals’ Perceptions of Board of Directors’ Views of Organization’s
HR Function/Department’s Role (by Organization Sector)
Overall
(n = 303)
Publicly Owned
For-Profit
(n = 74)
Privately Owned
For-Profit
(n = 140)
Nonprofit
(n = 52)
Government
(n = 23)
Differences
by Organization
Sector
Primarily strategic
15%
24%
9%
13%
13%
Publicly owned for-profit >
privately owned for-profit
Equally strategic and transactional
54%
51%
51%
67%
61%
Primarily transactional
31%
24%
40%
19%
26%
Privately owned for-profit > nonprofit
Note: Excludes HR professionals who responded “not sure” to this item and those from “other” organization sectors. Column percentages may not total 100% due to rounding. Sample size is based
on the actual number of respondents by organization sector who answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
30
The findings indicate that organization staff size had an impact on nonmanagerial
employees’ perceptions of HR’s role within the organization. Respondents from small
(35%) and medium organizations (31%) were more likely than their counterparts from
large organizations (18%) to report that nonmanagerial employees viewed HR as
equally strategic and transactional (Table 24). By contrast, HR professionals from large
organizations (81%) were more likely than HR professionals from medium (67%) or
small organizations (63%) to report that nonmanagerial employees viewed HR’s role as
primarily transactional. This suggests that HR professionals from large organizations are
more apt to feel that nonmanagers’ perceptions of the HR department’s role are limited
to the tasks performed. This may be particularly true for HR departments with specialist
roles, where nonmanagerial employee interactions with specific HR staff are within a
narrow range of functional areas or responsibilities.
HR Mentoring
In order for the human resource profession to be recognized for its contribution
to business strategy and organizational success, non-HR staff and divisions within
organizations need to be educated about the value to be brought to the organization
through leveraging HR’s strategic capabilities. Moreover, individual HR practitioners
need to have the opportunity to take on the roles beyond the traditional administrative
tasks that not only are associated with HR but often limit perceptions of HR.
Mentoring and/or advising has been cited as an important means through which HR
professionals can inform others about HR’s role in business strategy as well as gain a
better understanding about the organization’s business activities and learn how to form
strategic connections between HR activities and business results.9 To what extent do
HR professionals receive or provide mentoring about the ways that the HR function/
department can contribute to an organization’s business strategy? As shown in Figure 7,
a slightly larger proportion of HR professionals have mentored others (59%) than have
received mentoring (53%) while in their current position. Overall, just over one-half
of HR professionals have been involved in mentoring in their current job. Mentoring
activities could help contribute to emerging HR practitioners’ as well as non-HR staff’s
understanding of the roles and competencies of HR and influence perceptions of HR
as a key contributor to the organization’s business strategy. Further, mentoring and
Table 24 | HR Professionals’ Perceptions of Nonmanagerial Employees’ Views of Organization’s
HR Function/Department’s Role (by Organization Staff Size)
Overall
(n = 443)
Primarily strategic
2%
Small
(1 to 99 employees)
(n = 125)
2%
Medium
(100 to 499 employees)
(n = 164)
2%
Large
(500+ employees)
(n = 131)
Differences
by Organization
Staff Size
1%
Equally strategic and transactional
28%
35%
31%
18%
Small, medium > large
Primarily transactional
70%
63%
67%
81%
Large > small, medium
Note: Excludes HR professionals who responded “not sure” to this item. Column percentages may not total 100% due to rounding. Sample size is based on the actual number of respondents by
organization staff size who answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
31
advising among HR professionals may take place either within one organization or
through networks and/or relationships built across organizations.
Not surprisingly, HR professionals from small organizations were least likely to have
mentored others about the ways that HR can contribute to the business strategy. Nearly
three-quarters of HR professionals from large organizations (71%) and almost twothirds of those from medium organizations (62%) reported that they had mentored
others about HR’s potential to contribute to the organization’s business strategy,
compared with 41% of HR professionals from small organizations (Table 25). In
smaller organizations, HR professionals may work more closely with the other business
functions and may not need to establish formal mentoring relationships in order to
foster understanding of how HR capabilities and competencies can contribute to the
business strategy. This finding may also be tied to differences by organization staff
Figure 7 | Are HR Professionals Involved in Mentoring About HR’s Contribution to the Organization’s Business Strategy?
59%
53%
Received mentoring
(n = 481)
Have mentored others
(n = 470)
Note: Excludes HR professionals who responded “not sure” to these items. Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 25 | HR Professionals Have Mentored Others About Ways That HR Can Contribute to
an Organization’s Business Strategy (by Organization Staff Size)
Overall
(n = 470)
Small
(1 to 99 employees)
(n = 132)
Medium
(100 to 499 employees)
(n = 172)
Large
(500+ employees)
(n = 138)
Differences by Organization
Staff Size
Yes
59%
41%
62%
71%
Medium > small
Large > small
No
41%
59%
38%
29%
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
32
size in how HR professionals view their HR function/department’s role, with HR
professionals from smaller organizations more likely than their counterparts from larger
organizations to report viewing this role as primarily transactional.
As illustrated in Figure 8, HR professionals received mentoring from a variety of sources
in their current position. More than three-quarters of HR professionals (77%) indicated
that they were mentored by other HR professionals, including chief HR officers and
other top-level HR staff, about ways that HR could contribute strategically to the
organization’s business strategy. Mentoring among HR professionals might take place
within a single organization in a direct-report relationship or across organizations as HR
practitioners form networks within the profession. One-quarter of respondents (25%)
received mentoring from the CEO or president of the organization. Other sources of
mentoring included legal counsel and attorneys, consultants and other SHRM members.
The sources from which HR professionals have received mentoring may be indicative
of their organization’s business strategy and/or operating goals. Further, the sources of
mentoring may reflect HR professionals’ interests in business operations or special areas
within human resource management (e.g., legal issues in workforce management).
HR professionals’ sources of mentoring varied according to organization staff size,
as shown in Table 26. HR professionals from large organizations were more likely
Figure 8 | Who Has Mentored HR Professionals About HR’s Contribution to the Organization’s Business Strategy?
77%
25%
10%
11%
9%
1%
Other HR
professionals
CEO/president
CFO
CIO
COO
Others
(n = 253)
Note: Excludes HR professionals who had not received mentoring. Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
33
than HR professionals from small organizations to report having received mentoring
from other HR professionals (89% compared with 63%). The organization’s CEO/
president and chief financial officer were more likely to be sources of mentoring for HR
professionals in small organizations than for HR professionals in large organizations
(24% compared with 11%, and 17% compared with 4%, respectively). Arguably, large
organizations are more likely than small organizations to have multiple HR staff,
including higher-level HR professionals who are able to provide mentoring. By contrast,
HR professionals in small organizations may not have other HR professionals within the
organization, but they work directly with the CEO/president or chief financial officer,
making these positions the logical sources of mentoring.
Table 27 shows the differences in sources of mentoring among employment sectors.
The vast majority of HR professionals from government agencies (90%) and publicly
owned for-profit organizations (87%), compared with slightly more than one-half of
HR professionals from nonprofit organizations (56%), received mentoring from other
HR professionals. This finding may be partially due to the size of organizations within
the employment sectors, as publicly owned for-profit organizations may be more likely
to have multiple HR staff in ratio to larger numbers of total staff. HR professionals
from privately owned for-profit organizations (13%) were more likely than their
HR Perspective
According to the survey report findings, 77% of HR professionals
who received mentoring on ways that HR can contribute strategically to business strategy indicated that they have received mentoring from other HR professionals. Informal mentoring, in fact,
has a number of excellent advantages: it is a high-level, targeted
coaching; it provides different types of networking opportunities
(e.g., professional and social contacts); it helps to strengthen
workplace culture through one-on-one interactions across the
organization; and it often results in a lasting professional relationship. The ideal mentor is committed to the development, growth
and advancement of people. Additional mentor qualifications
include being regarded as successful in one’s profession, having
strong interpersonal and leadership skills and patience, willingness to take risks, and sharing credit for work well done with
others.
The fictitious mini-case study below presents a scenario that could
occur in a number of organizations and is an example of an opportunity where leaders in the HR community can ‘give back’ to the
HR management, through mentoring, by providing guidance to HR
professionals who want to grow and perform effectively.
34
A newly promoted director of HR worked for a medium-sized organization of 270 employees—a domestic privately-owned for-profit
credit union. Last year, the company developed a competitive business strategy, with a major goal focused on leadership. As a result,
a leadership development program was successfully rolled out that
year. As a follow-up to that initiative, HR was to establish a robust
succession plan. While the director of HR was a seasoned professional with 10 years of progressive HR generalist background, she
did not have experience with strategic succession plans. Further,
her mentor, the prior director of HR, had recently left the organization. In view of the importance of this strategic goal—and the
subsequent high expectations placed upon her—the director of HR
needed to be proactive and find a mentor—quickly!
She did her homework and learned that many firms were not focusing on succession planning, as confirmed by the SHRM 2006
Succession Planning Survey Report, where only 29% of companies reported having a formal succession plan in place.10 However,
she could not afford to fail, and so she promptly set out to locate a
mentor with specific qualifications: 1) a results-oriented coach; 2)
experience developing succession plans; 3) immediate availability
counterparts from publicly owned for-profit organizations (1%) to report that they
received mentoring from a chief information officer.
HR’s Impact
HR professionals were asked to indicate the extent to which they agreed with various
statements about their organization’s HR department/function (Figure 9). These
statements were based on core HR competencies derived from the 2007 Human
Resource Competency Study.12 Nearly all respondents strongly agreed or agreed
that their HR departments/functions carry out the administrative/transactional
needs of managing the organization’s workforce (97%), understand the core of the
organization’s business (96%) and are responsive to employees of all levels within
the organization (95%). The lowest percentages of HR professionals strongly agreed
or agreed that their HR departments/functions contributed to the strategic vision
and direction for the organization (79%), had a direct impact on business processes
(75%) and integrated talent management initiatives with business strategy (74%).
These findings suggest high levels of HR competence in the Operational Executor
and Business Ally roles. HR department and function competencies in most need
of development overall include those required of the Credible Activist and Strategy
Architect roles. Behaviors that define competency in these roles include leveraging
for mentoring sessions; and 4) a willingness to share personal
experiences relevant to her goal. Through networking at her local
SHRM chapter, she was able to identify a highly recommended
mentor. This individual, vice president of human resources at a local bank, had worked in the financial sector for nearly 20 years and
was well-respected in the HR community. When she contacted
him and explained her situation, the vice president accepted her
request and promptly set up their first session.
Over the next five weeks, the director of HR worked diligently
with her mentor. Their sessions focused on the development of a
detailed succession plan within two months, to be fully integrated
into the corporate culture by year’s end. During these coaching
sessions, the vice president challenged her to let go of her fear of
failure. She began to gain confidence in the reality of successfully
achieving her goal. For example, she already had the support of the
CEO and top management for this initiative, an organizational priority. In fact, two primary steps—having clearly defined leadership
criteria and a plan to find, retain and motivate future leaders—had
been developed and set in motion in the leadership development
program. Under the guidance of her mentor, the director of HR
developed an action plan to identify the credit union’s critical leadership roles (including the staff holding these positions and their
anticipated retirement dates), create a projected organizational
chart, establish a process to identify high-potential leaders who
could fill these positions, and define measures of success for each
stage of the succession plan.11
Ultimately, by taking a proactive approach to her goal, the director
of HR was not only successful but also gained a greater appreciation of the power of effective networking, an expanded awareness
of organizational politics and culture, a strong professional friendship and ‘mentor for life,’ and a substantial bonus award for work
well done.
As highlighted in the survey results, HR’s strategic role in the
organizational context has a substantial influence on business
success. Through targeted coaching with an experienced mentor,
HR professionals can decrease their learning curve, widen their
professional network and increase their ability to contribute to the
organization’s business strategy.
35
relationships—both within and outside the company—and being actively involved in
creating a forward-looking business strategy and thus delivering business results.
Ernest Gundling, president of Aperian Global and member of SHRM’s Organizational
Development Special Expertise Panel, observes, “Overall, the survey results suggest that
at least as seen through the lens of HR professionals themselves, HR is now fulfilling
the multiple roles suggested by Ulrich. For instance, HR is not only responding to
administrative/transactional needs but, in most cases, is also in a position to understand
the real business needs of the organization and to make a contribution to strategy,
organizational culture and business processes. Also, the results suggest that there is
still more work to be done, particularly in the important areas of ensuring that talent
management initiatives are fully integrated with business strategy and in impacting
business processes.”
As shown in Table 28, HR professionals from small and medium organizations
reported greater average agreement with the statement that their HR departments
were responsive to employees of all levels within the organization. This indicates that
HR professionals from large organizations feel limited in their approach to some levels
within the organization, possibly as an effect of being more likely to be engaged in
strategic roles within the organization and less likely to be focused solely on serving the
day-to-day transactional needs of employees.
Table 26 | Sources of Mentoring on HR’s Contribution to an Organization’s Business Strategy (by Organization Staff Size)
Overall
(n = 253)
Small
(1 to 99 employees)
(n = 68)
Medium
(100 to 499 employees)
(n = 104)
Large
(500+ employees)
(n = 78)
Differences
by Organization
Staff Size
Other HR professionals
77%
63%
77%
89%
Large > small
CEO/president
25%
42%
25%
11%
Small > large
Chief financial officer
10%
17%
10%
4%
Small > large
Note: Excludes HR professionals who had not received mentoring. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 27 | Sources of Mentoring on HR’s Contribution to an Organization’s Business Strategy (by Organization Sector)
Overall
(n = 253)
Publicly Owned
For-Profit
(n = 72)
Privately Owned
For-Profit
(n = 120)
Nonprofit
(n = 39)
Government
(n = 20)
Differences by
Organization Sector
Other HR professionals
77%
87%
75%
56%
90%
Publicly owned for-profit,
government > nonprofit
Chief information officer
9%
1%
13%
14%
5%
Privately owned for-profit >
publicly owned for-profit
Note: Excludes HR professionals who had not received mentoring and those from “other” organization sectors. Sample size is based on the actual number of respondents by organization sector who
answered this question using the response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
36
Defining the Six Competencies
Credible Activist: The HR professional is both credible (respected, admired,
listened to) and active (offers a point of view, takes a position, challenges assumptions).
Culture and Change Steward: The HR professional recognizes, articulates and
helps shape a company’s culture. As stewards of culture, HR professionals
respect the past culture and also can help to shape a new culture. […] They develop disciplines to make changes happen throughout the organization. This may
include implementation of strategies, projects or initiatives.
Talent Manager/Organization Designer: The HR professional masters theory,
research and practice in both talent management and organization design. Talent
management focuses on competency requirements and how individuals enter
and move up, across or out of the organization. Organization design focuses on
how a company embeds capability (for example, collaboration) into the structure,
processes and policies that shape how an organization works.
Strategy Architect: The HR professional has a vision for how the organization can
“win” in the marketplace, now and in the future. He or she plays an active part in
the establishment of the overall strategy to deliver on this vision. This means recognizing business trends and their impact on the business, forecasting potential
obstacles to success and facilitating the process of gaining strategic clarity. The
HR professional also contributes to the building of the overall strategy by linking
the internal organization to external customer expectations.
Operational Executor: The HR professional executes the operational aspects
of managing people and organization. Policies need to be drafted, adapted and
implemented. Employees also have many administrative needs (e.g., to be paid,
relocated, hired and trained). HR professionals ensure that these basic needs are
efficiently dealt with through technology, shared services and/or outsourcing.
Business Ally: HR professionals contribute to the success of a business by knowing the social context or setting in which their business operates. They also know
how the business makes money, which we call the value chain of the business:
who customers are, why they buy the company’s products or services. Finally, they
have a good understanding of the parts of the business (finance, marketing, research and development, engineering), what they must accomplish and how they
work together, so that they can help the business organize to make money.
Source: Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008). HR competencies: Mastery at
the intersection of people and business. Alexandria, VA: Society for Human Resource Management.
37
HR Metrics
To what extent are organizations calculating and tracking measurable outcomes of
HR activities? According to HR professionals, about one-half of HR departments/
functions (49%) had formal (i.e., documented and established) systems and processes
in place to collect HR metrics and/or measurement data (Figure 10). The remainder
of organizations either informally collected HR metrics or did not have any processes
or systems for collecting HR metrics, indicating a gap area for possible future growth
for the HR profession. HR metrics and measurement data, such as cost-per-hire and
turnover rates, can help organizations understand the impact of HR activities.
As shown in Table 29, more than one-half of HR professionals from large (57%) and
medium organizations (55%) reported that their organizations had formal systems and
Figure 9 | Agreement That the Following Statements Reflect the Organization’s HR Function/Department
Conducts the administrative/transactional needs of
managing the organization’s workforce (n = 480)
97%
Understands the core of the organization’s business
(n = 477)
96%
Responsive to employees of all levels (n = 476)
95%
Facilitates change within the organization (n = 466)
84%
Actively shapes the organization’s culture (n = 458)
84%
79%
Contributes to the strategic vision (n = 459)
Has a direct impact on business processes (n = 442)
Integrates talent management initiatives with business
strategy (n = 426)
75%
74%
Note: Percentages do not total 100% due to multiple response options. Includes responses of “agree” or “strongly agree.” HR professionals who responded “not sure” were excluded from analysis.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
38
processes in place to collect HR metrics, compared with less than one-third of HR
professionals from small organizations (31%). While these data do not preclude the
possibility that HR metrics are collected on an informal basis, they suggest that small
organizations may be less likely to have a measure of the impact of their HR activities.
According to HR professionals, almost two-thirds of publicly owned for-profit
organizations (61%) had formal systems and process in place to collect HR metrics,
compared with 41% of privately owned for-profit organizations that had such systems
(Table 30). Publicly owned firms may be under more pressure to have a measure of the
impact of their HR activities—as well as other functional/departmental activities due to
shareholder accountability—and thus may be more likely to implement formal processes
for collecting these data.
Beyond measuring the effectiveness of HR activities on HR functional areas (e.g.,
recruiting, retention), HR metrics can give organizations a picture of how HR
activities support the organization’s financial and operating goals. Figure 11 shows
that among organizations that had formal systems and processes for collecting HR
metrics, 52% reported formally calculating the impact of HR activities on measurable
aspects of business performance such as profits, client retention and product quality.
HR professionals can help underscore the importance of the HR function within the
organization and potentially garner more financial resources and management support for
HR activities by demonstrating, through the use of metrics, the value that these activities
Table 28 | Average Agreement With Statements About Organization’s HR Function/Department (by Organization Staff Size)
Responsive to employees of all levels
Overall
(n = 476)
Small
(1 to 99 employees)
(n = 139)
Medium
(100 to 499 employees)
(n = 172)
Large
(500+ employees)
(n = 139)
Differences
by Organization
Staff Size
3.44
3.53
3.49
3.29
Small, medium > large
Note: On a scale where 1 = “strongly disagree” and 4 = ‘”strongly agree;” higher numbers indicate greater average agreement. HR professionals who responded “not sure” were excluded from
analysis. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options
for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 29 | Organization Has Formal Systems and Processes for Collecting HR Metrics (by Organization Staff Size)
Overall
(n = 464)
Small
(1 to 99 employees)
(n = 136)
Medium
(100 to 499 employees)
(n = 170)
Large
(500+ employees)
(n = 133)
Differences
by Organization
Staff Size
Yes
49%
31%
55%
57%
Medium > small
Large > small
No
51%
69%
45%
43%
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
39
bring to the organization through their direct impact on business
performance.
Figure 10 | D
oes the HR Department Have Formal Systems
and Processes for Collecting HR Metrics?
Organization staff size had an effect on the likelihood of formally
calculating the impact of HR activities on business performance.
HR professionals from large organizations (61%) were more likely
than their counterparts from medium organizations (42%) to
report that their HR departments formally calculated the impact
Yes
of HR activities on the organization’s business performance (Table
49%
31). Large organizations may be more likely to use a balanced
scorecard approach to measuring organizational performance
and, in turn, may be more likely to expect their HR departments
No
51%
to provide metrics or measurements demonstrating the impact
of their activities within the organization. According to Charity
Hughes, MSOD, SPHR, consultant with Nationwide Insurance
Company and member of SHRM’s Organizational Development
Special Expertise Panel, “It is no surprise that larger organizations
(n = 464)
are more astute at documenting and reporting the impact of
Note: Excludes HR professionals who responded “not sure” to this item.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM,
HR activity. Senior leaders realize that the most costly expense
2008)
as well as the greatest asset an organization has is its workforce.
Larger organizations tend to have more stakeholders. The more
stakeholders an organization has—such as customers, employees, market analysts,
political interest groups and investors—the demand for information regarding
Related Research
The finding illustrated in Table
within organizations.13 Compared
an employee advocate role. HR
strategic functions; therefore, this
28 is consistent with the results
with HR professionals from large
professionals from large organiza-
group of HR professionals may feel
of the 2007 Human Resource
organizations, HR professionals
tions may be serving larger numbers
somewhat disconnected from the
Competency Study assessing
from medium organizations reported
of employees for very specific needs
day-to-day needs of the organiza-
HR professionals’ competencies
greater average degrees of HR
(i.e., when in specialist roles) or serv-
tion’s workforce.
in various roles that HR occupies
professional competency to play
ing the organization overall through
HR Professionals’ Average Degree of Competency to Play Various Roles (by Organization Staff Size)
Employee Advocate: pay attention to the
day-to-day requirements of employees
Small
(1-99 employees)
(n = 26)
Medium
(100-499 employees)
(n = 36)
Large
(500+ employees)
(n = 381)
Differences
by Organization
Staff Size
4.40
4.56
4.16
Medium > large
Note: Greater numbers indicate greater average degrees of competency. Sample size is based on the actual number of respondents by organization staff size who answered this question
using the response options provided. Table includes only response options for which there were significant differences.
Source: 2007 Human Resource Competency Study: RBL Group, University of Michigan Ross School of Business, SHRM, IAE School of Business, IMI, Tsinghua University, AHRI, and the
National HRD Network [unpublished data]
40
operations increases. Stakeholders want to ensure that all resources
are appropriately utilized.”
Figure 11 | Does the HR Department Formally
Calculate the Impact of HR Activities
on Business Performance?
Tracking Staff Hours
According to HR professionals, only about one in three
organizations (38%) tracked billable hours for any part of
their staff (Figure 12). These organizations may have different
administrative and workforce management needs that influence the
HR department/function’s operation, including which functional
areas are critical to the organization and the sourcing of related
responsibilities as well as the primary role or roles that HR occupies
within the organization.
Yes
52%
No
48%
Differences emerged when the data were analyzed by organization
staff size. HR professionals reported that small organizations (49%)
were more likely than large organizations (26%) to track billable
hours for any portion of their staff (Table 32). Organizations that
include positions for which hours are tracked and billed back to
clients may be more likely to be concentrated in selected industries,
such as legal services and consultancies, that tend to operate as
firms with smaller rather than larger numbers of staff.
(n = 198)
Note: Excludes HR professionals from organizations that do not have formal systems and/
or processes in place to collect HR metrics and those who responded “not sure” to this
item.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM,
2008)
Table 30 | Organization Has Formal Systems and Processes for Collecting HR Metrics (by Organization Sector)
Overall
(n = 464)
Publicly Owned
For-Profit
(n = 109)
Privately Owned
For-Profit
(n = 225)
Nonprofit
(n = 68)
Government
(n = 41)
Differences by
Organization Sector
Yes
49%
61%
43%
53%
41%
Publicly owned for-profit >
privately owned for-profit
No
51%
39%
57%
47%
59%
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 31 | HR Department Formally Calculates the Impact of HR Activities on Business Performance (by Organization Staff Size)
Overall
(n = 198)
Small
(1 to 99 employees)
(n = 37)
Medium
(100 to 499 employees)
(n = 79)
Large
(500+ employees)
(n = 70)
Differences
by Organization
Staff Size
Large > medium
Yes
52%
46%
42%
61%
No
48%
54%
58%
39%
Note: Excludes HR professionals from organizations that do not have formal systems and/or processes in place to collect HR metrics and those who responded “not sure” to this item. Sample size is
based on the actual number of respondents by organization sector who answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
41
Further, there were differences by organization sector in the percentages of
organizations that tracked billable hours (Table 33). HR
professionals employed by privately owned for-profit organizations
Figure 12 | Does the Organization Track
(48%) were more likely than their counterparts in publicly owned
Billable Hours for Its Staff?
for-profit organizations (26%) to indicate that their organizations
tracked billable hours for staff. Tracking billable hours helps
organizations with budget forecasting efforts and calculating the
actual profit from various income streams—activities that may be of
more necessity for privately owned firms.
Yes
38%
Obstacles to HR Effectiveness
What organizational factors hinder HR efforts and limit HR’s
effectiveness in the organization? The largest percentage of HR
professionals (56%) reported that HR’s effectiveness was limited
by the budget available for HR initiatives. This may include money
for developing human resource information systems, employee
rewards and recognition, training and development, and wellness
programs. Nearly one-half of respondents (46%) reported that
available headcount for HR initiatives was a factor limiting
HR’s effectiveness, suggesting that some organizations may feel
obligated to sacrifice certain HR initiatives due to inadequate staff
resources within the department or function. Only 12% of HR
professionals reported that lack of support of HR initiatives by
No
62%
(n = 419)
Note: Excludes HR professionals who responded “not applicable” or “not sure” to this
item.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM,
2008)
Table 32 | Organization Tracks Billable Hours for Its Staff (by Organization Staff Size)
Overall
(n = 419)
Small
(1 to 99 employees)
(n = 131)
Medium
(100 to 499 employees)
(n = 154)
Large
(500+ employees)
(n = 117)
Differences
by Organization
Staff Size
Yes
38%
49%
38%
26%
Small > large
No
62%
51%
62%
74%
Note: Excludes HR professionals who responded “not applicable” or “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this
question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
Table 33 | Organization Tracks Billable Hours for Its Staff (by Organization Sector)
Overall
(n = 419)
Publicly Owned
For-Profit
(n = 94)
Privately Owned
For-Profit
(n = 214)
Nonprofit
(n = 59)
Government
(n = 38)
Differences
by Organization
Sector
Yes
38%
26%
48%
31%
32%
Privately owned for-profit >
publicly owned for-profit
No
62%
74%
52%
69%
68%
Note: Excludes HR professionals who responded “not applicable” or “not sure” to this item and those from “other” organization sectors. Sample size is based on the actual number of respondents
by organization sector who answered this question using the response options provided.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
42
nonmanagerial employees was a factor limiting HR’s effectiveness in their organization.
These data are presented in Figure 13.
According to Colleen Mills, Ph.D., organizational psychologist and executive coach,
Fast Lane Coaching, and member of SHRM’s Organizational Development Special
Related Research
Previous SHRM research has
although there were differences by
organizations (73%) were also
of major organizational change.
identified differences by organiza-
organization staff size in the percent-
more likely than HR departments in
According to HR professionals who
tion staff size in the percentages of
ages of HR departments that have
small organizations (45%) to have
responded to the SHRM 2007
HR departments that track metrics
this responsibility.14 HR professionals
responsibility for identifying potential
Change Management Survey, re-
for various organizational activities.
from large-staff-sized organizations
succession gaps.
spondents from large organizations
According to HR professionals who
(72%) were more likely than those
responded to the SHRM 2006
from small organizations (46%) to
Further, differences emerged
from medium organizations (43%)
Succession Planning Survey, nearly
report that their HR departments
by organization staff size in the
to report that HR analyzed the po-
two-thirds of HR departments (64%)
were responsible for tracking data
percentages of HR departments
tential impact of the organizational
used metrics to support the organi-
to support the succession planning
that conducted pre-implementation
change on stakeholders prior to
zation’s succession planning efforts,
process. HR departments in large
assessments of the potential impact
implementation of the change.15
(61%) were more likely than those
HR Department Responsibilities in the Succession Process (by Organization Staff Size)
Overall
(n = 223)
Small
Medium
(1 to 99 employees) (100 to 499 employees)
Large
(500+ employees)
Differences
by Organization
Staff Size
Tracking data to support the
succession planning process
64%
46%
63%
72%
Large > small
Identifying potential succession gaps
62%
45%
61%
73%
Large > small
Note: Data sorted in descending order by “overall” column. Includes only HR professionals whose organizations had either a formal succession plan or an informal succession plan. Sample
size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes only response options for
which there were significant differences.
Source: SHRM 2006 Succession Planning Survey Report
HR Roles During Major Organizational Changes (by Organization Staff Size)
Analyzing potential impact of change
on stakeholders (pre-implementation)
Overall
(n = 316)
Small
(1-99 employees)
(n = 72)
Medium
(100-499 employees)
(n = 113)
Large
(500+ employees)
(n = 98)
Differences
by Organization
Staff Size
51%
46%
43%
61%
Large > medium
Note: Data sorted in descending order by “overall” column. Excludes HR professionals who indicated that their HR departments were not involved in processes related to major changes in
their organizations. Sample size is based on the actual number of respondents by organization staff size who answered this question using the response options provided. Table includes
only response options for which there were significant differences.
Source: SHRM 2007 Change Management Survey Report
43
Expertise Panel, “While HR has made great strides over the last several years getting
a seat at the table, many organizations still feel that the non-compliance services
offered by HR are a ‘nice to have’ versus a ‘must have.’ This belief definitely plays a
role during the budget allocation process, especially during hard economic times. The
differences based on company size are most likely a reflection of the role HR plays in
the organization. Many small organizations focus much of their budget dollars and
headcount on core HR functions such as recruiting, compensation/benefits and EEO
compliance. These HR functions are often more tactical in nature and critical to the
day-to-day operation of the business. As an organization grows, the breath and depth
of HR initiatives extend beyond the core HR functions into what many business
leaders consider the ‘soft’ HR offerings. These offerings tend to be more strategic
in nature and include programs such as leadership development, talent management
and succession planning. The linkage between these types of HR initiatives and
organizational success is less immediate and tangible, thus making funding for these
types of project less likely during challenging economic times.”
SHRM Organizational Development Special Expertise Panel member Ken Moore of
Ken Moore Associates adds, “I see a strong correlation between the lack of funding and
the sense of value that CEOs place on the HR initiatives.
Figure 13 | What Limits HR’s Effectiveness?
56%
Available budget for HR initiatives
46%
Available headcount for HR initiatives
37%
Management/executive team’s perception/support of HR initiatives
23%
CEO’s perception/support of HR initiatives
Nonmanagerial employees’ perception/support of HR initiatives
(n = 470)
Note: Percentages do not total 100% due to multiple response options.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
44
12%
Budget items that provide definitive value to the organization are usually funded—
regardless of the size of the organization. HR’s existence as an internal asset is being
challenged by intense competitive business pressures that are forcing CEOs to rethink
their strategies just to survive, let alone prosper.”
As shown in Table 34, HR professionals employed by large organizations were more
likely than their counterparts employed by small organizations to report that available
budget for HR initiatives (65% compared with 49%) and available headcount for HR
initiatives (56% compared with 35%) were factors limiting HR’s effectiveness in their
organizations. These findings are counterintuitive, as larger organizations clearly have
more staff resources and may also have more financial resources earmarked for HR
initiatives than organizations with fewer than 100 employees. It may be possible that
a larger workforce requires greater resources. Large organizations may be well advised
to examine their HR-staff-to-general-staff ratio in light of needed HR initiatives and
increase HR staffing as necessary.
Table 34 | F
actors Limiting HR’s Effectiveness (by Organization Staff Size)
Overall
(n = 470)
Small
(1 to 99 employees)
(n = 140)
Medium
(100 to 499 employees)
(n = 172)
Large
(500+ employees)
(n = 137)
Differences
by Organization
Staff Size
Available budget for HR initiatives
56%
49%
58%
65%
Large > small
Available headcount for HR initiatives
46%
35%
45%
56%
Large > small
Note: Excludes HR professionals who responded “not sure” to this item. Sample size is based on the actual number of respondents by organization staff size who answered this question using the
response options provided. Table includes only response options for which there were significant differences.
Source: HR’s Evolving Role in Organizations and Its Impact on Business Strategy (SHRM, 2008)
45
Conclusions
How HR functions are viewed within organizations is dependent on several factors
such as organization staff size, employment sector and the dynamics of the organization
and its operations. Crossing over from the traditional view of HR as a primarily
administrative role to an increasingly strategic role involves not only the organization
seeing the value in HR’s contribution, but also HR’s ability, as a field, to assertively
move beyond a focus on administrative responsibilities and assume a directive role to
prove its impact on the business strategies and financials through the collection of solid
measurements attributed directly to HR’s role.
HR is positioned to contribute to the organization’s business strategy through aligning
HR functional areas with the organization’s priorities. HR professionals can apply
their advance awareness of workforce trends such as recruiting difficulty and new-hire
compensation changes to their talent management activities, including recruiting and
retention efforts. Further, HR can lead the organization in planning for the future
through succession planning and leadership development.
HR is positioned
to contribute to
the organization’s
business strategy
through aligning
HR functional
areas with the
organization’s
priorities.
HR professionals’ most frequently cited limitations to HR’s effectiveness are lack of
budget and lack of HR staff for HR initiatives. Signs that the organization is ready
for HR to become a key contributor to developing and implementing organizational
strategy may include investment of more resources in HR. Collecting HR metrics is the
best way for an HR function and/or department to prove the impact of HR activities
on the organization’s business operations. HR professionals also need to be aware of the
various ways HR can assist the organization in meeting its goals. Mentoring, particularly
cross-departmental mentoring, can help HR professionals become strategic contributors
to the organization’s business strategy by increasing their understanding of other key
functions within the organization.
Exhibiting a willingness to expand focus and gain broad understanding not only of
HR functions but also of the business operations will increase HR’s scope of influence
and promote recognition of HR for having the potential to support and enhance
organizational operations.
47
Demographics
Industry
Organization Staff Size
Small (1 to 99 employees)
31%
Services (profit)
20%
Medium (100 to 499 employees)
39%
Manufacturing (durable goods)
13%
Large (500+ employees)
30%
Health
12%
Government
7%
Educational services
6%
Finance
6%
High-tech
6%
Manufacturing (nondurable goods)
5%
Services (nonprofit)
5%
Wholesale/retail trade
5%
Insurance
4%
Construction and mining/oil and gas
3%
Telecommunications
2%
Transportation
2%
Utilities
2%
Newspaper publishing/broadcasting
1%
Other
2%
(n = 462)
Source: SHRM 2008 HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
HR Department Staff Size
1 to 4
59%
5 to 9
18%
10 to 24
11%
25 to 49
3%
50 to 99
4%
100 or more
5%
(n = 462)
Source: SHRM 2008 HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
(n = 486)
Note: Percentages do not total 100% due to rounding.
Source: SHRM 2008 HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
Organization Sector
Privately owned for-profit organization
49%
Publicly owned for-profit organization
24%
Non-profit organization
15%
Government agency
9%
Other
4%
(n = 485)
Note: Percentages do not total 100% due to rounding.
Source: SHRM 2008 HR’s Evolving Role in Organizations
and Its Impact on Business Strategy
48
Appendix
Notes and Caveats
Number of respondents: The number of respondents (indicated by “n” in figures
and tables) varies from table to table and figure to figure because some respondents did
not answer all of the questions. Individuals may not have responded to a question on
the survey because the question or some of its parts were not applicable or because the
requested data were unavailable. This also accounts for the varying number of responses
within each table or figure.
Differences: Conventional statistical methods were used to determine if observed
differences were statistically significant (i.e., there is a small likelihood that the
differences occurred by chance). Therefore, in most cases, only results that were
significant are included, unless otherwise noted.
Generalization of results: As with any research, readers should exercise caution
when generalizing results and take individual circumstances and experiences into
consideration when making decisions based on these data. While SHRM is confident in
its research, it is prudent to understand that the results presented in this survey report
are only truly representative of the sample of HR professionals responding to the survey.
Confidence level and margin of error: A confidence level and margin of error give
readers some measure of how much they can rely on survey responses to represent all
of SHRM members. Given the level of response to the survey, SHRM is 95% confident
that responses given by respondents can be generalized to all SHRM members with a
margin of error of approximately 4%. For example, 50% of HR professionals reported
that they performed non-HR duties in addition to their HR-related job functions. With
a 4% margin of error, the reader can be 95% certain that between 46% and 54% of all
SHRM members would report that they had non-HR duties. It is important to know
that as the sample size decreases, the margin of error increases, and therefore the margin
of error for each individual question will vary depending on the number of responses to
that particular question.
49
Endnotes
Society for Human Resource Management. (2008). The varying roles of HR: A look
at HR by organization staff size. Retrieved from www.shrm.org/surveys
1
2
Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008).
HR competencies: Mastery at the intersection of people and business. Alexandria, VA:
Society for Human Resource Management.
3
The survey instrument is available upon request by contacting the SHRM Survey
Program at [email protected] or by phone at 703-535-6301.
4
Society for Human Resource Management. (2008). The varying roles of HR: A look
at HR by organization staff size. Retrieved from www.shrm.org/surveys
5
RBL Group, University of Michigan Ross School of Business, SHRM, IAE School
of Business, IMI, Tsinghua University, AHRI & the National HRD Network.
(2007). 2007 human resource competency study. United States: Authors.
6
These data are not depicted in a table or figure.
7
These data are not depicted in a table or figure.
8
Society for Human Resource Management. (2007). 2007 job satisfaction: A survey
report by SHRM. Alexandria, VA: Society for Human Resource Management.
9
Society for Human Resource Management. (2005). The SHRM Symposium on the
Future of Strategic HR. Alexandria, VA: Society for Human Resource Management.
10
Fegley, S. (2006). SHRM 2006 succession planning survey report. Alexandria, VA:
Society for Human Resource Management.
11
Lockwood, N. R. (2006). Leadership development: Optimizing human capital for
business success. SHRM Research Quarterly: 4.
12
Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2008).
HR competencies: Mastery at the intersection of people and business. Alexandria, VA:
Society for Human Resource Management.
13
Ibid.
51
14
Fegley, S. (2006). SHRM 2006 succession planning survey report. Alexandria, VA:
Society for Human Resource Management.
15
Benedict, A. (2007). SHRM 2007 change management survey report. Alexandria,
VA: Society for Human Resource Management.
52
Recently Published
SHRM Survey Products
Other SHRM Research resources on HR’s role within organizations:
The Look and Feel of Strategic HR—Conversations With Senior HR Executives
(24 pages, December 2006)
2006 Strategic HR Management Survey Report (39 pages, October 2006)
www.shrm.org/research
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6. 2006 Strategic HR Management Survey Report (39 pages, October 2006)
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To access these reports and for a complete listing of all SHRM survey products, please
visit www.shrm.org/surveys.
54
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