HR depts [continued from page 1]

SHRM president and CEO Susan Meisinger said Sunday in her opening remarks that there is perception in the C-suite that among such functions as finance, sales and marketing, IT and research and development, HR ranked "dead last" in five categories, including strategic contributions and business knowledge.

"Ouch," Meisinger said. "Is it a perception? Yeah. Is it reality? You tell me."

Outsourcing, which has gained momentum in the past year, has been marketed as a way for HR to shed the administrative baggage that has kept it from doing its important strategic work. But when a company farms out one or two areas like health benefits and retirement programs to a third party, Lawler says the result is a modest reduction in administrative costs, not a strategic gain.

"Outsourcing is not the final answer" for companies seeking to transform their HR practice from a reactive force to a strategic one, he says. Rather, companies need to focus on developing HR organizations that have the skills, credibility and knowledge to effect critical changes in the business.

In the years ahead, HR organizations will do that work with fewer people, thanks to downsizing that affects staff functions in companies everywhere. Outsourcing also will reduce the overall number of HR positions.

Fewer bodies in HR will not diminish its importance, however. For those who survive the cuts, the hoped-for shift to a strategic model will require that they have more business expertise well beyond the traditional HR realm. One example Lawler cites is the ability to manage complex contracts with a company's outsourcing vendors. He recently saw one document that ran 1,000 pages.

Perhaps more than anything, companies want HR professionals "who understand the business challenges they face," says Fran Luisi, a principal in Charleston Partners in Rumson, New Jersey, a firm that matches HR executives and businesses.

To that end, HR professionals should make it a top priority to spend half their time learning the issues that confront different areas of the organization such as operations and finance, says Mike Losey, former president and CEO of SHRM.

More junior practitioners need to get a basic understanding of the business world, something that Losey half-jokingly says "shoe clerks have a better grasp of" than some HR people do.

He recounts a recent certification meeting in which a member of a company's HR staff asked him the difference between blue-collar and white-collar workers and whether companies were obligated to pay striking employees. Losey says he was amazed that someone with so little grasp of workplace issues had an HR job in the first place.

Despite such anecdotes, there are many companies at which HR functions at a high level and is viewed as a strategic and vital part of the business.

At GlaxoSmithKline in Philadelphia, Tom Kaney, senior vice president for human resources, says that his group is part of the executive strategy team. Kaney meets daily with the pharmaceutical company's top executives.

Though that kind of formal access is key, Kaney says another factor can determine whether HR initiatives change and thrive: a company's informal culture.

"People knock on the door and walk in," he says of his relationship with colleagues. But even the best HR person can't be effective if a company has a stiff culture and a lack of access to decision-makers. In such cases, HR will forever be "swimming upstream," Kaney says.

According to Hewitt's report, HR leaders who want to get "unstuck" and work strategically can do so, provided they have "a clear vision of where to take HR and a plan for getting there quickly.

"To make such changes a reality, HR leaders will have to have the "drive and charisma" to convince everyone in the organization, from the CEO on down, that this is the workforce management path to take, according to Hewitt.

"When led with energy and insight," the report concludes, "an HR transformation effort can gain enough momentum to deliver exceptional results."