Feb 28, 2007
Transactional vs. Strategic Functions of HR
Too often, HR is caught between its two functions– the transactional against strategic.
Outsourcing the transactional processes is becoming popular these days, specially to large and dynamic companies. These transactional processes are
- Recruitment
- Timekeeping and Payroll
- Training, OD and Human Development.
- And to some extent, Medical Services.
This practice is becoming a viable option in order for HR to focus on its strategic role, ensure industrial peace and spearhead Corporate Social Responsibility. Local industries, to be competitive, must adhere to international standards. HR, therefore, must take the lead to prepare the organization and its human capital.
The war on talent has cost the nation the best and brightest of our people to first world countries either for temporary employment or permanent migration.
Some companies in the first world, before doing business with local companies, would require compliance to international laws on CSR, Labor and Employment.
The role of HR is crucial to the expansion of the company and it’s participation in the global arena. The organization can’t afford to let HR spend it’s precious time on transactional duties trying to please everybody.
Those who have not gone into outsourcing have ventured into an integrated HR system to expedite and simplify the process so they can have more time for the strategic role.
There is a cost, though, on both– that would mean a leaner manpower compliment for HR. This is one factor why not all would embrace the idea of outsourcing and/or investment on an integrated system.
It is the principle of Job generation and/or security.
Should ethical consideration prevail over the competitiveness of the company? What is your take?
Is HR ready to be phased out as we know it, is the proper question.
The basic reason (foundation) for HR is the transactional activity and the proper management of the related activities.
Strategic Human Resources can be done by one person or outsourced. In fact,
Strategic Human Resources is puffery. Buying into this is the death mill of
HR. All departments within a company MUST be part of the management and
success of their company or organization.
Please allow me to attest that it is not a choice between transactional and strategic HR management. Competencies in both are necessary for an effective HR management, i.e. if the objective is a productive work force and sustainable profitability for the Company — creating a democratic organization that will unleash creativity and productivity of all employees. Competency in attending to the individual needs of all employees in the organization and not losing sight of the overall Company’s economic performance is a must for every HR management practicioner. To achieve this though in the Philippine setting, it is imperative that an owner/shareholder representative lead the HR organization for the simple reason that there is a built-in conflict of interest between managers and owners. No matter how high the rank of the HR head is, if s/he is not a shareholeder, s/he will protect his/her job more than anything else, even at the expense of the Company and its people.
I am of the opinion that OD and Human Development should not be outsourced. Practitioners in this function must have had fully embraced the mission and values of the company they are working for if they are to be fully effective. He or she must embody the values of the company and be seen walking in it as well as \’preaching\’ it. An outsider would be the wrong person to occupy this important role.
Great thoughts guys… thanks.
I think the PR of HR departments needs some work. For the most part, HR departments are regarded as worthless ‘fun police.’ Of course this is usually what we hear from those not involved with the strategic mission in any way. I would agree that HR needs to be very involved and ‘plugged in’ to the overall mission and goals of their company to be of any ‘real’ value. Otherwise, why not outsource? (and maybe in a few industries this approach would work fine). For the most part, though, any dynamic field needs a lot more cohesion and communication than those that are .. more stagnant.
Hi Jim,
I agree with you that HR, most of the time, has PR problem. IMO, these low regard is because of the transactional role. The poor response time or the error associated with it or lack of empathy or combination of all. Thanks for visiting
good day sir,
just want to ask if you know the importance of HR department in a cooperative society. what are the basic functions of the HR and its staff especially if the HR department is just a newly establish department of the company. what are the services that the HR department must offer to the coop employees as well as to is members and savers. thanks and Godbless.
Hi Shari,
The functions of HR are the same, whether in a start-up or established company, private or public sector.