Article: The HR transformation journey: Transactional to strategic

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The HR transformation journey: Transactional to strategic

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HR continues to re-contextualize its role within the organization, and to look at the HR function from the perspective of the needs of the organization.
The HR transformation journey: Transactional to strategic

HR needs to understand its role and priorities from the perspective of business goals, by asking the question How does this company succeed"?


The conversation around shifting HR from a transactional to strategic business function has been going on for two decades already, and for many organizations, has already progressed through the introduction of new service-delivery models (such as shared services, centers of excellence and embedded HR specialists), the adoption of new talent-centric HR technology, the outsourcing of selected business processes, and the introduction of metrics to try to better define the business impact/value of the HR function. 

Today, we focus on HR playing a role as a business partner, where it will be involved in discussions around how to increase revenue and reduce cost, identify/attract/retain talent, and create the most productive and innovative workplace possible. We have re-contextualized the HR convention, to look at HR from the perspective of the needs of the organisation. What this means is that we seek to understand and engage in the business, and based on the challenges and opportunities each organization is confronted with, shape the priorities and actions of the HR function.  We then look at HR challenges from the perspective of the business goals, by asking the question “How does this company succeed?”, and “How can HR contribute to this success?”

As we transform our HR business function to provide a platform for supporting the ongoing success of our respective organizations, HR needs to pay attention to these three aspects of its role:

  1. Understand business context: HR needs to be in tune with the needs of its organization.  HR managers need to know the challenges the business faces as well as having the ability to realize the opportunities provided by this rapidly changing VUCA environment (VUCA stands for volatile, uncertain, complex and ambiguous). It means we can’t take another 20 years to create an agile and flexible support platform to help our organizations respond to market disruptions.

  2. Account for talent dynamics: In this connected, Information Age, communication goes beyond physical boundaries. We can find and manage talent across borders and boundaries. The products and services of companies, too, are available globally. Much depends on our ability to choose and leverage the right people across geographies. We are in the midst of the knowledge-based economy, and are more aware of what kind of people and talent we need. However, we need to operate in a talent-scarce marketplace, where building your own talent and/or buying it will still not provide the talent needed by the organization. And these constraints are amplified by the challenge of managing a multi-generational workforce, and retaining the best talent in a fluid and dynamic talent market.

  3. Make use of analytics:  One of the key roles of HR is to develop and leverage deep insight into the workforce. We acknowledge that managing people is a complex responsibility, and providing HR practitioners with analytical tools doesn’t just help them to understand the past or present behaviours of the workforce, but also to make predictions onthis behavior in the future. Using sophisticated data-mining technologies, HR can utilize the recorded behaviors of the workforce in the past, and project this into the future, to understand what HR management issues may arise.  Then, using the latest generation of predictive tools, HR can model changes to the workforce and workplace, and upon deciding on the optimum course of action, put these actions in place to avert HR issues and optimize positive HR outcomes.

Organizations are re-engineering their HR processes to meet the fast-evolving corporate landscape. For instance, organisations are evaluating the utility and value of traditional performance management processes, and moving toward more rapid goal-setting and feedback cycles, while acknowledging the increasing value of network contributors as well as individual contributors to business unit outcomes.  This focus on true business contribution and outcomes will bring HR closer to the Board and C-level executives in each organization, and will allow HR to play a truly strategic role in each organization’s success.

*An interview on this topic first appeared on Live

This article is a part of the People Matters- Oracle Let's Talk Talent series. Click here to visit the Let's talk talent page to read more such articles.

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Topics: Strategic HR, #Lets Talk Talent, #HR Ready

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