Competing Claims on HR and Their Relationships

The tensions underlying these challenges capture two distinctive and often divergent sets of pressures on organizations.

The first set is the external versus internal pulls that exercise the minds of managers, often embedded in the distinction between operational and strategic management. The second set relates to the goals of strategic or operational activity inside an organization - whether these are principally aimed at maximizing shareholder value or more concerned with legitimacy of operations, which is fast extending to reputations for ethical and sustainable practice, good governance and leadership, and for being a good employer in the eyes of regulatory institutions, the increasingly influential business press, existing and potential customers, clients and employees.

These dimensions produce a matrix that helps us understand how modern HR management teams in a number of organizations have developed a set of interrelated, transactional and transformational strategies to meet the external challenges set by the business strategies of modern organizations and the longer-term branding and reputational drivers (see Figure 1).

The HR strategies embrace the internally focused drivers in Figure 1 and reflect how the organization regards its human resources, what role the resources play in the overall success of the business, and how they are to be treated and managed. This statement is typically very general, thus allowing interpretation at more specific levels of action within an organization.

To deliver HR strategy, organizations typically respond with a mix of re-organization of the HR function itself and new information technology (IT) approaches. The re-organization of the HR function involves new HR delivery models, often based on a tri-partite model of shared services (see Peter Reilly’s guide), centres of excellence and strategic or business partnering (see Mark Withers’ Guide) along the lines recommended by Ulrich & Brockbank (2005) with outsourcing and, in some cases, off-shoring of key services, especially shared service centres (Reilly & Williams, 2005). The introduction of IT, often in combination with new HR delivery models can then rationalize or transform HR’s internal operations (Reddington, Williamson and Withers, 2005).

It should be emphasized at the outset that these organizational, process re-engineering and IT solutions are interdependent. Without progressively sophisticated IT, new HR delivery models would not be as effective: indeed it is the increased reach and richness of IT-enabled information and organizational learning that have facilitated simultaneous centralization and delegation of decision-making in HR, cited by academics and observers as the single most important claimed distinctive capability of new HR delivery models. One of the logical consequences of these developments is the potential ‘virtualization’ or, at least, significant ‘leaning’ of HR which results from simultaneously reducing the numbers of specialists required to deliver HR services internally while improving the quality of these same services and developing new HR business models.

The introduction of technology, therefore, offers the potential to transform HR’s role. It promises to do this by:

• Increasing the HR function’s influence as consultants focused on the needs of managers and employees
• Enabling new flexible and responsive methods of delivering HR services, such as self-service via the Internet or Intranet
• Expanding HR’s reach as the experts of the organisation’s people processes and the developers of value propositions for different employee groups.

As such, it can be seen to represent a major paradigm shift in HR management, as it moves from a more traditional administrative support role into ‘business partnership’. However, this may only be a necessary but not sufficient condition for a transformation. There needs to be a will to change and a capability to do so within the HR function. Moreover, HR’s customers need to shift their perception of the value that HR can add. All too often, it seems the perceived pre-occupation with administrative activities “leads to an institutionalised devaluation of the HR function by the rest of the organisation because of HR’s low level of contribution to the business.” (Lawler and Mohrman, 2003)

So the claims for new organizational solutions to HR and for the increased application of technology to HR processes exert strong pressure on organizations, including many in the public sector, to replace their integrated HR functions with the tripartite ‘Ulrich’ framework. For example, a report by Mercer consulting claimed that in response to a survey of client organizations ‘nearly 80% of companies have completed or are in the process of undergoing HR transformation’ (Theaker & Vernon, 2006).

Thus, the ‘bandwagon’ of technology-enabled HR solutions, often called ‘e-HR’, seems to be growing at a rapid rate driven by some evidence of promising practices and positive evaluations of technology and outsourcing projects. Indeed, over time, the term e-HR has attracted a variety of meanings. The more visionary, advanced interpretations describe a fully integrated, organisation-wide electronic network of HR related data, information, services, data bases, tools, applications and transactions that are generally accessible at any time by employees, managers and HR professionals – shown diagrammatically in Figure 2.