Nishchae Suri, Business Head, Consulting Analytics, Asia-Pacific, Hewitt Associates

In today’s economic climate, smart companies agree people are their most important asset and one of their key competitive advantages—everything else can be replicated. However; as rapid globalization continues to impact the region and Asia’s markets become increasingly bullish, the talent market is becoming increasingly competitive. As a result, HR issues form some of the greatest challenges CEO’s face today, most notably attracting and retaining the best talent, steadily improving people productivity and dealing with a diverse workforce in the midst of increasing globalization. Hence, HR today is expected to not only comprehend but also conceptualize; not only create but also innovate, not only implement but also sustain relevant strategies and contribute effectively to giving a corporation its winning edge.

Despite this, HR departments are on the whole still not considered a valuable strategic asset. After nearly 20 years of hopeful rhetoric about becoming “strategic partners” with a “seat at the table” where the business decisions that matter are made, the truth of the matter is most HR professionals aren't even close. The majority of HR executives remain, to all extent and purposes, neither strategic nor leaders.

So how does HR make the transition? In order to become more strategic, HR departments need to shift their focus from advising on how processes can be improved or technical program enhancements to addressing those people-related issues that truly impact the business.

There are nine key actions HR departments can undertake to make their role more strategic.

Align People with Strategy and Competency Building

In any organization, HR’s core objective is to improve business results through people, and this philosophy manifests itself in just about every aspect of the business. In order to play an integral part in the overall organizational strategy, you must lead change, create a shared need, shape a vision, inspire commitment, build enabling systems, monitor and demonstrate progress, and make all of this sustainable.

Empower Managers and Employees

In order to become a strategic partner to your organization, you must empower your employees, investing a sense of ownership in them, recognizing their ideas, and making them feel they are important to the organization. In order to do this you must transform your managers into the face of the company, enabling them to make HR decisions within a prescribed policy framework. HR should obviously be available for feedback and to help resolve issues, but without empowering employees and managers, you will remain stuck in the quagmire of process and policy.

Drive Leadership Development

HR is the primary architect of the development and succession plans of any organization. Your role is to guide and coordinate these plans by identifying critical leadership competencies, creating a context for leadership development, coaching managers to take up leadership positions and providing honest and frank feedback. You must help your organization nurture leadership talent by working in conjunction with other managers. HR must also sometimes take the lead in establishing partnerships with executive and mid-level managers to put in place the internal development systems, training, programs, projects, mentoring opportunities, and management review teams that make leadership development and planning a reality.

Synergize Diversity

Most progressive Best Employers have a corporate diversity policy that actively seeks to cross-pollinate people across cultures and business geographies, going far beyond merely transferring employees from one part of the world to another. These companies promote more women managers to management committees, accept and support work/life balance programs for both men and women, and at the very least, provide cross-functional exposure and movement. HR is the custodian of encouraging and fostering workplace diversity so you must encourage your organization to synergize diversity.

Retain Key Employees and Manage Attrition

Attrition rates are especially high in Asia Pacific, affected not only by people changing jobs but also careers. As such, HR’s role is to design a differential reward policy that rewards employees diversely to garner the right financial results. According to the 10th Annual India Salary Increase Survey, 84 percent of organizations linked salary increase to performance ratings, and an outstanding performer received twice salary the increase awarded to an average performer in 2005.

However, not all employees are on the lookout for a higher salary, so HR should create a performance culture that nurtures these employees. You should be helping employees develop skills at all levels, strengthening managerial capability, designing high-potential programs for key talent, formulating an effective pay strategy, driving a performance-based culture, identifying the leaders of tomorrow, designing an honest and timely communication program to address employees on their career prospects, and building senior leadership commitment.

Make Pay Communication More Transparent

In a recent interview, Alan Lafley, CEO of Proctor & Gamble, said one of the most valuable lessons he has learned during his tenure was the importance of keeping communication at “Sesame Street level”. Few employees in Asia actually understand the myriad components in their pay packets and, somewhat shockingly, even fewer are actually interested. HR must communicate and help employees understand the need for those components, working out the best possible structure to motivate them. Alternative forms of reward that are simple to administer and are constantly improved upon can contribute to creating a sense of belonging so strong that people would not dream of working anywhere else.

Achieve Post Merger and Acquisition Success

Since the late 1990s, M&A deals in Asia have grown considerably in sophistication and complexity, and an increasing number of companies are realizing that people-related issues such as cultural adaptability and an understanding of local HR policies and practices have a strong impact on the long-term success of many deals. Underestimating or failing to address basic HR challenges that arise during due diligence on any merger or acquisition leaves companies vulnerable to legal incompliance, exposed to potentially large hidden costs and undeclared expenditures, and at huge risk of loosing key employees.

Foster a High-Performance Culture

Performance management is at the heart of all HR processes; however it is becoming increasingly difficult for HR to successfully foster a high-performance culture. Some HR professionals become guilty of creating standardized solutions rather than encouraging exemplary employees, which does little to drive the business.

Hewitt’s Asia-Pacific Salary Increase Study, 2005 reveals that organizations are increasingly focused on measuring and managing performance, with 98 percent of participating organizations saying they have formal platforms for performance management and 94 percent linking salary increases to performance. According to the study, the use of variable pay as a strategic lever continues to be an important means of attracting and retaining talent, and 86 percent of participating organizations have a variable pay plan in place. The study also indicates that variable target payouts have increased across all levels.

Efficient and Effective Service Delivery

In order to focus on the more strategic initiatives and still ensure efficient service delivery, HR needs to redesign its supply chain and automate routine services. Standard services need to be decentralized in order to gain economy of scale. It is also imperative that HR departments make the necessary changes so that they own the decision-making mechanisms and not just the decision.

Even today, most HR departments limit themselves by focusing on best practices rather than results. They don’t connect employee and customer value propositions as they don’t feel they own the money spent on the people. Other barriers to excellent HR service delivery include a penchant for building greater complexity into program designs rather than convincing business leaders they'd be better served with a simpler, well-executed system. HR's textbook approach to employee development is another obstacle to successful delivery efforts. The reality is that HR professionals simply don’t know because they’ve spent far too much time perfecting activities that more progressive companies are outsourcing!

The Road Ahead

So assuming HR follows these key pointers, can they really act as strategic partners? In order for HR departments to be taken seriously as a strategic partner, it is essential that you make the quantum leap to actually behaving as a business and accepting accountability for business results. You must focus on creating and maximizing value and mitigating risks. HR can contribute greatly to the financial success of any company, but in order to do this you must be just as focused as any other department when it comes to achieving business goals.