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A recent study finds HR professionals struggling to meet increased demands with dwindling resources, and expecting more of the same in 2012. Experts say HR can view these challenges as an opportunity to solidify its position as a strategic partner within the organization.

By Mark McGraw

"Doing more with less" is an all-too-common theme for HR leaders these days. Now, in the third year of a sluggish economy, HR professionals find themselves struggling to cut benefits and other costs, maintain employee morale and find top talent in a sea of resumes -- all while dealing with increasingly fewer resources.

It's no surprise, then, that a recent survey conducted by Information Strategies Inc. finds these issues to be key concerns for HR professionals, many of whom expect to have even less to work with in 2012.

In the survey of 1,018 HR professionals, 71 percent said their position has become more difficult in 2011, noting that company management is demanding more from their HR departments. About half (51 percent) said they are working with smaller staffs, compared to years past.

Shrinking HR staffs can be attributed to more than just a dismal economy, says Dave Ulrich, professor of business at the Ross School of Business at the University of Michigan.

"Some of the reduction in HR staff is because the transaction or administrative work of HR is being streamlined and done through technology or service centers, or [has been] outsourced," says Ulrich, who is also a co-founder and partner at the RBL Group, a Provo, Utah-based consulting firm.

"This overall trend of administrative efficiency will continue, as HR separates into administrative and strategic work," he says.

Indeed, business leaders have come to expect HR professionals to be "their thinking partners, coaches, advisers and change leaders," as HR organizations have begun to move transactional activities to shared service centers, says Anne M. St. Clair, senior consultant in the talent management organization alignment practice at New York-based Towers Watson.

As such, HR teams may feel that more demands are being placed on them, says St. Clair. But, she adds, HR can use this time to "understand drivers of growth and competitive advantage, and [determine] what organizational capabilities will be required to support that growth and differentiation."

"HR needs to build a strategy that connects to the business strategy, and use that as a framework for prioritizing HR initiatives to ensure they are spending their time on the highest impact areas," St. Clair says.

A failure to connect to the business strategy will put an even greater strain on HR's resources, cautions Peter Cappelli, a professor of management at The Wharton School in Philadelphia.

"The fundamental problem is that, unless HR can show that there are costs to cutting their functions -- in other words, being able to show that they add value -- nothing will stop the efforts to cut them back further," he says.

Staff reduction isn't the only way in which HR is feeling pinched, of course. A majority of survey respondents also noted their budgets are smaller than two years ago.

Not shocking, but organizations and HR should focus on "the supply and demand of rewards," St. Clair says, so their departments stretch limited funds and help retain the talent that still remains.

"Specifically, [HR leaders should] understand what employment features will motivate and retain an employee group, i.e., high performing and critical talent, and what features will drive the actions and behaviors that organizations require to be successful," she says.

The downsizing that has affected virtually every industry in recent years also means HR departments are inundated with resumes for available opportunities within their organizations. But, despite what would seem to be a deep candidate pool, nearly one-quarter (23 percent) of respondents cited finding top talent as a growing concern.

The understaffing within HR only compounds that problem, says Cappelli, adding that HR professionals have also "been given unrealistic requisitions for hiring -- including an unwillingness to give any time for training or even onboarding."

To combat this issue, Ulrich says, HR leaders, like job seekers, should rely on their professional networks to find the truly talented among scores of applicants.

"For decades," he says, "those seeking jobs have been counseled to use relationship networks to find jobs. Now, that advice can be shifted within companies. Hiring based on an anonymous resume is difficult, because most resumes end up looking alike. Good HR professionals have relationship networks to source and screen talent."

Indeed, says St. Clair, companies are seeing an unprecedented level of external applicants for job openings, and must adjust their approach to hiring accordingly.

"To effectively manage sourcing and to ensure leaders find the right candidates, HR leaders are rethinking their sourcing strategies -- leveraging external recruiters for sourcing, posting, pre-screening processes, and for managing the interview schedule and assessment processes," she says. "HR needs to consider where it can add value in the sourcing process to support business needs."

Ultimately, Ulrich says, the organization that has more talent will always be more productive and successful. But, he adds, the retention of top talent will always be an issue, "because the most talented employees almost always have a choice about where they will work."

In a climate such as this, issues such as finding and keeping top-notch employees and the other pressures facing HR leaders are certainly magnified, says Ulrich. But, "if the increased burden means that HR has to deliver more value to the business, so much the better."

"HR should deliver value in three areas," he says, talent, organizational culture and leadership. "Delivering these three outcomes does increase expectations for HR, but that's a good thing. When the work of HR can be linked not only to strategic success, but to investor, customer and community expectations, HR is doing a better job."

November 21, 2011