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HR Struggles with Organizational Growth

Call them growing pains. Today’s emphasis on business growth is changing the HR function, and HR is struggling to adapt, suggests a new survey.

The survey, conducted by the Human Resource Planning Society (HRPS) in partnership with the Institute for Corporate Productivity (i4cp), found that two-thirds of respondents said that HR is not “responding fast enough to the strategic challenges related to profitable new growth.” And about the same percentage said an emphasis on growth in their organizations is changing the meaning of “strategic HR.”

The survey also asked 466 participants—most of them HR professionals—about the role that senior HR leaders play in supporting and delivering organizational growth. The responses clearly illustrate that many senior HR professionals are struggling to establish a prominent position in this area. Regarding these roles, the single most commonly chosen response—cited by 33% of participants—was that senior HR leaders are “on the sidelines” and contributing in spot roles such as talent acquisition and integration. Another 10% said HR leaders are simply not included in the organization’s growth strategy, and 22% said that HR is “part of a team that is below the executive-team level and is involved in defining the capabilities that could be leveraged in new markets and applications.”

In short, most senior HR leaders do not play a role at the executive-team level in regard to supporting and delivering growth, but there is a minority who do. About one-fifth of respondents said senior HR leaders are critical members of the executive team and, as such, responsible for profitable growth, while another 16% say HR is a “key architect in positioning the organization to promote more growth.”

The HRPS/i4cp survey also asked respondents about the areas where they thought HR needs to “retool.” Among the large subgroup of respondents who said that an emphasis on growth was changing the meaning of strategic HR, the most widely cited method of retooling was the development of programs geared toward helping leaders become better at growing their organizations. Fully 68% of respondents cited the need to retool via learning programs that lead to new executive behaviors.

Another commonly noted HR strategy was “designing and staffing the growth-related organization.” This highlights the importance of talent management. Profitable and growing companies must make the right hires and allocate skilled people into the right areas.

A third HR strategy was “helping leaders to frame the growth challenge for the organization.” HR professionals have unique perspectives on the workforce challenges associated with profitable growth. For example, they can be the first to spot “scalability” problems if an organization is too dependent on workers who have rare skill sets. They may also be uniquely able to assign measures to growth-related problems such as turnover, hiring costs, and other staffing concerns.

The HRPS/i4cp survey asked respondents about the extent to which their companies take certain actions to implement a business growth strategy. As with several previous i4cp studies, customers turned out to be a key factor. The most frequently cited action was “focusing on meeting customer requirements,” followed by “delivering high quality,” “hiring candidates on their ability to meet organizational goals,” and “being an innovative industry leader.”

It’s interesting that only one of these top four actions—hiring people who can meet company goals—is related to conventional HR responsibilities. The rest are more closely linked to the needs of the marketplace, whether that means meeting customer needs, providing high-quality products, or remaining on the innovative cutting edge.

This lends support to the notion that HR professionals should adapt to the strategic challenges associated with profitable growth. As various leading thinkers in the field have argued, the HR function increasingly must serve the primary goals of the business. This means learning more about the needs and mindsets of colleagues in sales and marketing (experts on customers), manufacturing (experts on quality), and research and development (experts on innovation).

Without this expanding business focus, HR may find that its reflexes remain too slow to support or cope with organizational growth. If so, then the “growing pains” that many HR professionals feel today could linger on for years to come.

For more information, visit www.i4cp.com

The survey is the basis for a longer article scheduled to appear in Human Resource Planning in December 2007, which will be a special issue of the journal dedicated to HR’s role in high-growth organizations