Research reveals CEOs require strategic shift from traditional HR roles

People have risen to the top of the corporate strategic agenda, as a key driver of competitive advantage according to a worldwide survey by Deloitte with the Economist Intelligence Unit. The report, ‘Aligned at the Top,’ a survey of 531 senior business executives and HR leaders highlights the key challenge facing organisations is what role Human Resources (HR) will play in maximising this key corporate asset.

Representing every major industry and global region, the report details:

• 85% of senior executives identified people as vital to their business performance
• 88% believe people issues will become more important over the next three to five years
• 52% of senior executives said they currently do not have a Chief HR Officer on the Management Board
• Only 25% believe HR currently plays a crucial role in strategy formulation and operational results.
• While only 4% of those surveyed described their organisation as world class in people management and HR functions.

The study indicates that senior business leaders perceive HR to be more focused on transactional activities, such as benefits and performance evaluations, and on HR operating efficiencies rather than high-level strategic people issues, such as leadership development. In fact, when senior executives talk about people issues, in many cases HR isn’t even mentioned.

“Despite the shared view of how vital people are to organisational performance, surveyed HR executives and business executives seem to be having two different viewpoints when it comes to the people agenda,” said Mark O’Donnell, Director, Human Capital Services, Deloitte.

“Top company executives perceive a gap between the critical people agenda versus the HR agenda. They believe the HR department lacks the business insight to drive strategic initiatives around top priority issues such as leadership, talent management, creating a high-performance culture and training and development.  While HR executives agree with these priorities, they continue to remain focussed on their core role of improving HR operating efficiencies.”

Research reveals that many HR organisations already recognise the challenge to be more strategic and are shifting their administrative transactions and other non-strategic activities to shared service centres or an outsourcing vendor.

• 29% already outsource recruitment, training and payroll,
• 18% percent expect to outsource these and other HR activities in the next three to five years.

“HR organisations around the world already recognise they have an opportunity to play a more strategic role in the business. The key question that remains unanswered is, has HR been taken by surprise by developments and a growing need for accurate employee data and strategic HR capability to tackle business leaders’ priorities?” said O’Donnell.

“While the business executives’ people agenda is clear, the roles that business and HR leaders will play in addressing the company’s strategic people issues are not.  How business leaders approach the challenge - and how HR responds - will determine who takes the lead on managing People Strategy and HR Operations to address tomorrow’s most significant people issues.”

Survey respondents agree that the role of HR will change - within the next three to five years, where the vast majority (95%) expect HR to be perceived as a strategic, value-adding function, not just a cost centre.

“From an Irish point of view, HR functions need to increase their momentum to successfully create value and play their part in delivering towards the strategic agenda. To gain credibility as a true business partner, HR leaders need to become increasingly proactive in response to an ever changing business environment to ensure HR continues to operate efficiently and is positioned to address the important people issues business leaders have,” concluded O’Donnell.

Methodology
Deloitte Consulting LLP and the Economist Intelligence Unit collaborated on this study. Approximately 531 senior business executives and HR leaders representing companies globally participated in the research. Data was collected in the form of 481 written surveys and 50 executive interviews. Thirty-four percent of the total respondents identified themselves as part of the HR function. Participants represented every major region and industry, and companies varied in size from more than $10 billion in revenues to less than $125 million.

A full copy of the “Aligned at the Top” report is available by clicking here.

About the Economist Intelligence Unit
The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper.

The Economist Intelligence Unit provides geopolitical, economic and business analysis on more than 200 countries, as well as strategic intelligence on key industries and management practices.  With over 300 full-time professionals in 40 offices around the world, supported by a global network of more than 700 contributing analysts, the Economist Intelligence Unit is widely known for its unparalleled coverage of major and emerging markets.

About Deloitte

Deloitte Ireland is a world-class firm of expert business advisers, serving senior business leaders who are seeking to protect and create value in a complex, dynamic environment. Our objective is to help our clients succeed by anticipating tomorrow’s agenda with focused, insightful and fresh thinking borne out of our multidisciplinary strengths. We draw upon our specialist skills in audit, tax, consulting and financial advisory both within Ireland and across the Deloitte worldwide network. 

What’s different about Deloitte is our people, who focus on building long-term relationships and are determined to deliver measurable value for our clients’ business. With almost 900 people in Dublin, Cork and Limerick Deloitte is known as an employer of choice for our innovative human resources programmes and is dedicated to helping our clients and our people excel. 

'Deloitte' refers to Deloitte & Touche and any associated partnerships and companies established under the laws of Ireland. Deloitte is the Irish member firm of Deloitte Touche Tohmatsu. For more information, please visit the Irish member firm’s website at www.deloitte.com/ie.