To thrive amid these changes, HR professionals must develop the skills to become strategic business partners. In some instances, the HR department that emerges following a major outsourcing could be a very small group whose only job is to manage the relationship with the outsourcer. This is likely to happen if the company’s senior management takes the view that value creation at the top of the HR pyramid is too important to be left in the hands of an internal HR department. In this case, senior executives from other parts of the company may take on the strategic HR role themselves.
Some involvement in HR strategy on the part of executives is needed, but it shouldn’t be a substitute for having HR staff who understand the business and can be strategic partners. Line executives who are not experts in managing human resources and organizational effectiveness just don’t have the knowledge needed to link strategy and HR. Consultants can help, but they typically must be paired with respected insiders who have deep knowledge of their companies’ strategic and operational needs.
Modern organizations need a high-powered staff group that focuses on how human capital should be managed, developed, and teamed in order to implement an organization’s business strategy. Whether its work is called HR or organizational effectiveness isn’t important. What is important is that the group exists, and is staffed with talented executives.
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Edward E. Lawler III (firstname.lastname@example.org) is the director of the University of Southern California (USC) Center for Effective Organizations and a distinguished professor of business at USC’s Marshall School of Business. Professor Lawler specializes in the study of human resources management, compensation, and organizational development. He is a coauthor of the forthcoming book Human Resources Business Process Outsourcing: Transforming How HR Gets Its Work Done (Jossey-Bass, 2004).