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What is driving the need for HR to be strategic business partners? The business argument can be summarised as follows:

• After the cost cutting agenda of the last few years, the scope for increased profitability from cost reductions and efficiency improvements is severely limited.



• New profits will come from people creating new ideas and innovating improvements.

By innovation, we mean being able to adapt to changes in the external environment and competitive threats. Creativity is the ability to generate something genuinely new to gain competitive advantage. To secure improved profitability from creativity and innovation, managers need to be able to harness their peoples energies to improve all aspects of provision to their customers. Such engagement will depend on:

• Effective Leadership,



• Knowledgeable, skilled and motivated people and



• An organization designed to enable people to achieve.

To enable the development of the above, business managers need the expertise of HR specialists. Among other things, the improvement agenda includes:

• Developing higher level leadership capabilities among all managers,



• Establishing coaching skills and a flexible coaching style among managers to enable people to be more creative and innovative,



• Building teams within business units and functions,



• Fostering cross business/functional co-operation to facilitate sharing ideas and practice, and



• Developing the organization to ensure it is operating at the highest levels of effectiveness.

Addressing this agenda is not as straightforward as it might seem. This is because the HR function is not always positioned to deliver the positive influences the business organization needs.

The traditional focus on administrative matters and internal HR concerns has prevented HR developing credibility with business managers. This in turn has left organizations underdeveloped in their capability to perform. Leading executives now need to implement the necessary change to raise the capability of the HR function so that the business can obtain the right help to improve organizational effectiveness. Dave Ulrich in his Harvard Business Review article, ‘A New Mandate for Human Resources’ says ‘companies need (HR) people who:

• know the business,


• understand the theory and practice of HR,


• can manage culture,


• make change happen and


• have personal credibility’.

The initial challenge for HR people is to make sure they get invited to the meetings and discussions where critical business and organizational decisions get made. This is best addressed by developing productive relationships with business managers. Clearly, demonstrating commercial understanding of the business and being able to help other managers apply good people management are essential competencies. As Dave Ulrich says, ‘becoming a strategic partner demands a degree of knowledge about strategy, markets, and the economy’.

The Chartered Institute of Personnel and Development have identified the ability to network both internally and externally as being important if HR is going to be able to get managers together from different functions and business areas. The Institute further suggests that being able to mobilise energy and engagement behind ideas are also part of the emerging requirement.

At Nelson Consulting, we also feel that HR people should consider being more outgoing. They need to become sales orientated and go out into the business and listen to the aspirations and concerns of business managers and their people. To get to the key meetings, commercial acumen needs to be demonstrated. Showing a thorough awareness of cost disciplines is critical. However, to obtain the support of executives and line managers for important investments in the development of the organization and its people, HR professionals need to be able to show their business colleagues the cause and effect relationships between financial investments, development initiatives and results that will be gained to improve business success.

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