The Role of the HR Business Partner
Globalization and growing operational and labor market complexity have made HR a key player in solving organizations’ business challenges. Chief human resource officers (CHROs) are under tremendous pressure to deliver business outcomes while managing functional costs – unlocking the key drivers that improve the effectiveness of the HR function while having a greater impact on the business.
A September 2010 survey of CHROs by the Corporate Executive Board’s Corporate Leadership Council (CLC) found that improving the strategic effectiveness of the HR function is one of the top 10 priorities for 2011.
Other studies have shown that effective talent management has a direct impact on business performance. Organizations that do the best job attracting, developing, engaging and retaining their talent often outperform their peers in terms of sales, revenue growth and investor returns.
CLC survey analysis also revealed that HR must effectively partner with business line management to drive talent outcomes. Real strategic value doesn’t come from compliance, benefits administration or transactional efficiency. These roles and responsibilities are important, but for HR to have a meaningful impact on business results, it must partner with the line to drive talent outcomes. CLC found that effective HR line support can increase employee performance by 21 percent and employee retentionby 26 percent. Further, effective HR line support also drives business unit revenue and profit improvement by 7 percent and 9 percent, respectively.
The challenge for HR departments is determining what drives effectiveness. CLC analysis of different HR structures found that regardless of organizational model, the HR business partner (HRBP) consistently explains the most variation in HR line support effectiveness. HRBPs are the HR employees who work with managers within business units on talent and business and are sometimes referred to as HR generalists.
That doesn’t mean other HR functions don’t matter. They do, and there may be good reasons to use them for cost or expertise. However, CLC analysis has shown that even if an organization has the best specialists and shared services in the world, if its HRBPs underperform, it’s not likely to build an effective partnership with the line. In fact, HRBPs – specifically the strategic partner role they have – are fundamental to the effectiveness of HR support to line management.
The challenge is how to make the HRBP great at the strategic role, given that a September 2007 survey found that fewer than 1 in 10 line managers thinks the HRBP is an effective strategic partner.
CLC examined a host of different factors that could impact HRBP strategic effectiveness. Among these driver categories, analysis found only two have the most impact:
- An individual’s capabilities:
Companies that focused on developing an HRBP’s competencies in business acumen, innovation, leadership and metrics through on-the-job experiences maximized HR’s strategic effectiveness.
- Job design:
While spanning HRBP’s over too few line managers limits experiences, responsibility for too many client groups can overwhelm the HRBP and reduce strategic effectiveness. Deploying HRBPs against executives with similar needs improved understanding of the business line issues required to deliver strategic impact and allowed HRBPs to support a greater number of line managers.
Given today’s dynamic business environment, improving the strategic effectiveness of the HR function will be a major initiative for CHROs in 2011. Critical to its success will be the development of HR business partners and their support to line management. By focusing on the aforementioned areas, HR can drive talent outcomes and the positive business outcomes that follow.