The role of HR in uncertain times is an Economist Intelligence Unit report, sponsored by Oracle. 

The current business environment is demanding a great deal of workers around the globe. The practice of doing “more with less” has become the modus operandi in most businesses and business areas, perhaps nowhere more so than in human resources (HR) divisions. HR is being stretched and pulled every which way to meet challenging goals within unprecedented resource constraints.

This paper examines how HR organisations are navigating this gruelling business climate; the obstacles and challenges they face; and the areas in which they might find opportunities to develop and be more widely recognised as business-critical partners. In March 2009 the Economist Intelligence Unit conducted a global survey on human resources during an economic downturn. The major findings are as follows:

There are diverging perspectives between those working in the HR function and those elsewhere in the organisation regarding the strategies and goals of human resources. Sixty-six percent of HR respondents say they have identified opportunities to streamline processes and cut costs; just 49% of non-HR respondents, however, agree. Likewise, HR’s perception of the strategic role it plays in the organisation both now and in the coming years diverges from that of non-HR: 50% of HR respondents say that HR will play a more strategic role in the business than previously compared with 31% of non-HR respondents.

The biggest challenge the human resources function faces is to better align itself with the needs of the business. Survey respondents say that the biggest hurdles for HR are an inadequate understanding of the relationship between workforce reduction and business goals (39%) and of critical skill sets in the organisation (39%). This might be a result of a lack of communication of company goals on the part of senior management. Yet the neutral or negative perception of HR’s contributions at certain organizations could be mitigated by more overt displays of its knowledge of the business, particularly as it has the potential to play a key role during the downturn.

Performance management is viewed as a top priority for human resources across regions, functions and titles. Thirty-nine percent of survey respondents say performance management is a top priority at their organisation and 43% say it should be. Respondents overall cite the importance of evaluating performance with quantifiable metrics. Fifty-six percent of survey respondents (66% from the HR function) say their firms have implemented or are in the process of implementing a quantitative, metrics-based, performance management programme. A whopping 94% of respondents say their HR organisation has developed or is in the process of developing such a programme.

Boosting productivity without increasing costs requires a combination of employee development programmes and process improvements. Survey respondents cite four methods that are about equally successful in gaining additional productivity from employees without raising compensation costs: creating additional training programmes (44%), adopting more efficient methods of service delivery (44%), adopting more quantified and/or stringent performance evaluations (47%) and adopting mentoring programmes (47%).