Blog post written by Thomas Mulder. Thomas is a former blogger on Blogpodium and Accenture’s HR Director The Netherlands, Belgium and Luxembourg till January 2012.

The struggle of HR for a seat at the table is unmatched in many organizations.

While occupied in a safe environment focused on administration, reporting, employee matters and management support, many HR professionals proclaim the ambition of wanting to be a strategic business partner. Not only is it important that HR professionals will realize their personal ambition; A profound HR perspective is crucial for a people strategy that generates true competitive advantage.

Historic Challenge

Our economy is facing unprecedented challenges. We are in the midst of a digital revolution, the Internet revolution has only just begun, aging baby-boomers are struggling with Generation Y and we are in the midst of a climate and economic crisis. From a professional human resource and organizational development standpoint these developments could hardly be better;-) Organizations are in desperate need of a culture that fosters innovation and creativity on all levels. And organizational structures need to adapt to outsourcing and globalization.

Value HR

How does this affect the area of HR? First of all – as progressive businesses as Google and Microsoft start to understand – talent is the critical success factor for growth, market share and innovation. Also Accenture’s CEO confirmed that the talent and the capability to deliver are their differentiators in the marketplace. In an environment where talent is the sustainable competitive advantage, developing people effectively is equal to immediate value creation.

Secondly, leadership becomes an increasing critical success factor in 21st centuries’ organizations. Leaders need to inspire people and unblock potential by connecting the passion of the people to the purpose of the organization. Furthermore, as hierarchy within organizations will be replaced by higher levels of corporate responsibility, transformational and situational leadership will overrule power based management and control. Finally, to accommodate the next generation potentials on the labor market, leaders need to drive flexibility and autonomy in the workplace.

Thirdly, incentives are misaligned resulting in short term horizons. This distorts decision making that is required to cope with the challenges mentioned above. A different view on performance management is required as incentives need to be aligned with behavior that is key for continued advancement and success. Furthermore organizational values become visible in who you hire, promote and fire.

Fourthly, inclusion is required to leverage workforce potential. The diverse workforce that is driven by both globalization and the Generation Y entering the labor market need to be managed appropriately in order to be able to create more value than homogeneous workforces.

Fifthly, due to Globalization, standardization of operational work processes and outsourcing, organizational cultures need to shift from country based to a Globally Integrated Enterprise culture that is based on trust, feedback and non-monetary recognition.

Why HR?

If the challenges above are indeed considered to be of crucial strategic importance, one could argue that these items should primarily be on the agenda of leadership. Why should HR take a leading role in addressing and managing these challenges? First of all these challenges all relate back to individual people in the organization. Talented people with dreams, passion and ambition. Dealing with people and their talents is in the genes of HR. Next to that the capability to deliver solutions for talent and leadership development, performance management and cultural transformation is required. HR is the perfect environment to develop en deploy these capabilities. Finally the position in the organization differs from line managers. This allows HR to bring a different and long term perspective on the people strategy.

Are HR teams ready?

Many HR organizations find themselves to be focusing on optimizing their processes. Self-service concepts are rolled-out and shared services centers are created. These are great achievements that may significantly reduce the costs related to HR. However, these processes should begin with the end in mind. What is next when all transactional processes are taken care of? Did we still organize ourselves to cope with the transformational challenges ahead? When optimizing transformational processes we need to shift our focus from the hire – fire – appraisal process tot value creation in the entire chain of talent.

What should be on the HR Development Agenda?

If HR focuses on transactional value alone, the discipline as we know it will die. Transactional value creation ultimately will be outsourced. That is why HR professionals need to build the capability to develop and implement a people strategy. As the business needs to understand the dynamics of talent, HR needs to understand the business dynamics. HR needs to love both the people in the organization and the business the company is in. From this perspective HR needs to enable itself to provide predictive management information to support decision making in the context of the people strategy; It’s all about understanding the financial metrics that result in decision making. Finally HR needs to develop the consulting competencies that allow affectively conveying advice, vision and strategy.